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CASES 


ON 


Guaranty  and  Suretyship 


SELECTED  BY 

ROBERT  E.  BUNKER 

Of  the  Department  of  Law  of  the  University  of  Michigan 


GEORGE  WAHR 

Publisher  and  Bookseller 

ann  arbor,  mich. 


Copyright,  1902 
By  GEORGE  WAHR 


T 

1902. 


PREFATORY. 


The  cases  appearing-  in  this  vohime  iiave  been  selected  for 
use  in  connection  with  the  lectures  on  Suretyship  given  in  the 
Law  Department  of  the  University  of  Michigan.  Barring  omis- 
sion of  irrelevant  matter  in  some  instances  and  of  the  briefs  and 
arg-uments  of  counsel  in  all  instances,  the  cases  appear  in  this 
volume  as  they  appear  in  the  reports  themselves.  Uniformity  in 
•spelling  and  punctuation  has  not  been  attempted  or  thought  desir- 
able. In  regard  to  these  matters,  the  reports  have  been  followed, 
except  in  cases  of  manifest  error. 

The  purpose  has  been  to  put  into  the  hands  of  the  students 
taking  the  course  in  Suretyship  in  this  University  a  limited  nmii- 
ber  of  cases  which  wdll  serve  to  illustrate  and,  in  some  measure, 
to  supplement  the  lectures  on  that  subject.  Some  cases  have  been 
selected  for  the  forms  and  suggestions  they  furnish  in  the  prac- 
tical work  of  preparing  bonds  and  such  other  instruments  as  per- 
tain to  the  general  subject — such  work  being  a  material  feature 
of  the  course.  Such  a  volume  as  this  would  not  be  necessary 
were  it  possible  for  students  to  consult 'the  reports  themselves  in 
season  to  prepare  the  work  required  of  them.  The  great  number 
of  students  attending  the  Law  Department  of  this  University  puts 
that  possibilitv  out  of  question,  and  that,  too.  despite  the  very  com- 
plete Law  Library  so  arranged  as  to  afford  the  best  means  for  its 
largest  use. 

Robert  E.  Bunker. 

University  of  Michigan, 

Ann  Arbor,  Mich. 

November,  1902. 


6710R0 


CASES  REPORTED. 


Abbott  V.  Brown,  92. 
Aetna  Ins.   Co.   v.   Fowler,   247. 
Alger  V.  Scoville,  175. 
Andrews,  Eissing  v.,  200. 
Annable,  Russell  v.,  193. 
Arons,  Morrison  v.,  245. 
Auchampaugh  v.    Schmidt,   206. 

Backus,  The  People  v.,  134. 
Bacon,  Jones  v.,  167. 
Baldwin  v.   Hiers,   164. 
Ballard  v.  Burton,  110. 
Barber,    Easterly   v.,    274. 
Blanchard,  Dexter  v.,  190. 
Blanchard,  Gibbs  v.,  125. 
Brown,  Abbott  v.,  92. 
Bruner,  Moore  v.,  279. 
Buckmyr  v.  Darnall,  181. 
Butler,  Guild  v.,  208. 
Butler  V.  United  btates,  250. 
Burton,  Ballard  v.,  110. 

Campbell  v.   Sherman,  25. 

Cass  V.  Shewman,  19. 

Chalmers,  The  First  Nat'l  Bank  v.,  156. 

Clark  V.  Kellogg,  81. 

Clayton,  Re  Walker  v.,  281. 

Coster,  Union  Bank  v.,  57. 

Cox,  Lansdale  v.,  272. 

Daniels,  Thayer  v.,   270. 

Darnall,  Buckmyr  v.,   181. 

Davis  V.  Wells,  Fargo  &  Co.,  225. 

Davis  V.   Patrick,  141. 

Davis  Sewing  Machine  Co.  v.  Richards, 

118. 
Deacon,  Pearl  v.,   216. 
Deering  v.  Moore,  254. 
Deabold  v.  Opperman,  27. 
Dexter  v.  Blanchard,  190. 
Doby  V  .Fidelity  &  Casualty  Co,  289. 
Dodd  V.  Winn,  256. 
Dover  Stamping  Co.  v.  Noyes,  83. 

Easterly  v.  Barber,  274. 
Eastwood  V.  Kenyon,  174. 
Eissing  v.  Andrews,  200. 
Bmmert  v.  Thompson,  262. 
Evansville  Bank  v.    Kaufmann.   64. 


Farmers'   Bank,  Gano  v.,   121. 
Fidelity  &  Casualty  Co.,  Doby  v.,  289. 
Foster,  Vail  v.,  288. 
Fowler,  Aetna  Ins  Co.  v.,  247. 

Gano  V.  Farmers'  Bank,  121. 
Geagan,  Manley  v.,  131. 
Gibbs  V.  Blanchard,  125. 
Gillespie  v.  Toi-rance,  211. 
Grey,  Sutton  v.,  151. 
Griffith  v.  Rundle,  53. 
Griswold,  Hazard  v.,  199. 
Guild  v.  Butler,  208. 

Hartley  v.  Sanford,  169. 

Hawkins,  Roberts  v.,  98. 

Hazard  v.  Griswold,  199. 

Henry  McShane  Co.  v.  Padian,  89. 

Hiers,  Baldwin  v.,  164. 

Hooker  v.  Russell,  148. 

Hungerford  v.  O'Brien,  235. 

J.  W.  Butler  Paper  Co.,   Sherburne  v. 

86. 
Jones  V.  Bacon,  167. 

Kaufmann.  Evansville  Bank  v.,  64. 
Kellogg,  Clark  v.,  81. 
Kearnes  v.   Montgomery,  1. 
Kenyon,  Eastwood  v.,  174. 
Kimball  v.  Newell,  187. 
Kingsland  v.  Koeppe,  38. 
Kirkham  v.  Marter,  132. 
Koeppe,  Kingsland  v.,  38. 

Lansdale  v.  Cox,   272. 

Lee  V.  Yandell,  192. 

Littler,  Singer  Mfg.  Co.  v.,  76. 

McConnell  v.  Poor,  239. 
McMurray  v.  Noyes,  95. 
Manley  v.  Geagan,  131. 
Marter,  Kirkham  v.,  132. 
Marvin,  Welch  v.,  185. 
Mead  v.  Watson,  165. 
Mease  v.  Wagner,  183. 
Millikin,  Starr  v.,  139. 
Millikin,  Stoner  v.,  252. 
Molleson.  Smith  v.,   104. 


CASES     RKPORTF.D. 


Montgomery.  Kearnes  v.,  1. 
Moore,  Deering  v.,  254. 
Moore  v.  Bruner,  279. 
Morgan  v.  Wordell,  266. 
Morris  v.  Osterhout,  162. 
Morrison  v.  Arons,  245. 

National  Surety  Co..  United   States  v., 

48. 
iS'ational  Bank   v.   Peck.  221. 
Newell,  Kimball  v.,  187. 
Noyes,  Dover  Stamping  Co.  v.,  83. 
Noyes,  McMurray  v.,  95. 

O'Brien,  Hungerford  v.,  235. 
Opperman,  Deobold  v.,  27. 
Osterhont,  Morris  v.,  162. 

Packard,  Pain  v.,  219. 

Padian,  Henry  McShane  Co.  v.,  89. 

Pain  V.  Packard,  219. 

Palmer,  Villars  v.,  205. 

Patrick,   Davis  v.,   141. 

Peck,  National  Bank  v.,  221. 

Pearl  v.  Deacon,  216. 

Poor,  McConnell  v.,  239. 

Prior  V.  Williams,  259. 

Regents,  Weinberg  v.,  41. 

Re  Walker  v.  Clayton,  281. 

Richards,    Davis    Sewing    Machine    Co. 

v.,  118. 
Roberts  v.  Hawkins,  98. 
Rudy.  Trimble  v.,   286. 
Rundle,  Griffith  v.,  53. 
Russell  V.  Annable,  193. 
Russell,  Hooker  v.,  148. 

Saint  V.  Wheeler,  3. 
Sanford,  Hartley  v.,  169. 
Sawyer,  Weare  v.,  196. 
Schmidt,  Auchampaugh  v.,  206. 
Scoville,  Alger  v.,  175. 
Sheldon.  Smith  v.,  34. 


Sherburne  v.  J.  W.  Butler  Paper  Co.,  86. 

Sherman,  Campbell  v.,  25. 

Shewman,  Cass  v.,  19. 

Singer  Mfg.   Co.  v.  Littler,  76. 

Smith  v.  MoUeson,  104. 

Smith  V.  Shelden,  34. 

Smith  V.  Van  Wyck,  87. 

Starr  v.  Millikin,  139. 

Stoner  v.   Millikin,  252. 

Sutton  V.  Grey,  151. 

Swinney,   The  State  v.,  238. 

Taylor  v.  Wetmore,  78. 

Thayer  v.   Daniels,  270. 

The  First  Nat'l  Bank  v.  Chalmers,  156. 

The  People  v.   Backus,   134. 

The  State  v.   Swinney,  238. 

Thompson,  Emmert  v.,  262. 

Torrance,  Gillspie  v.,  211. 

Trimble  v.  Rudy,  286. 

Union  Bank  v.  Coster.  57. 
United  States,  Butler  v.,  250. 
United   States   v.  National   Surety   Co., 
48. 

Vail  V.  Foster,  288. 

Van  Wyck,  Smith  v.,  87. 

Villars  v.  Palmer,  205. 

Wagner,  Mease  v.,  183. 
Watson,  Mead   v.,  165. 
Weare  v.  Sawyer,  196. 
Weinberg  v.  Regents,  41. 
Welch   V.   Marvin,    185. 
Wells.  Fargo  Co..  Davis  v.,  225. 
Wetmore,  Taylor  v.,  78. 
Wheeler,  Saint  v.,  3. 
Williams,   Prior  v.,  259. 
Winn.  Dodd  v.,  256. 
Wordell,  Morgan  v.,  266. 

Yandell.  Lee  v.,  192. 


CASES 

ON 

GUARANTY  AND  SURETYSHIP 


KeARNES  TX    MOiXTGOMERY     (1870). 

4  W.  V'a.  29. 

Boggcss,  for  plaintift'  in  error. 

Deimis  &  Price,  for  defendant  in  error. 

The  facts  are  stated  in  the  opinion  of  IMaxwell,  J. 

Maxwell,  J.  This  was  an  action  of  assumpsit,  to  recover 
from  the  defendant  the  sum  of  2,000  dollars,  with  interest.  The 
facts  certified  show  that  on  the  28th  day  of  January,  i860,  the 
plaintifif  held  the  bond  of  the  defendant  an.d  one  J.N.  Montgomery 
for  2,000  dollars  ;  that  the  defendant,  on  the  day  and  year  afore- 
said, proposed  to  exchange  with  the  plaintift'  for  the  said  bond,  a 
bond  of  2,000  dollars  executed  by  Thomas  Creigh  and  L.  S.  Creigh^ 
to  the  plaintiff ;  that  the  ])laintiff  refused  to  accept  the  said  last 
mentioned  bond  unless  the  defendant  would  indorse  the  same, 
inasmuch  as  it  was  ])ayal3le  to  the  plaintiff'  and  not  to  the  defendant : 
whereupon  the  said  defendant  wrote  his  name  upon  the  back  of  the 
said  bond,  which  was  then  accepted  by  the  plaintiff',  who,  in  ex- 
change therefor,  delivered  to  the  defendant  the  said  bond  of  the 
defendant  and  J.  N.  Montgomery  ;  that  afterwards,  and  after  the 
institution  of  the  suit,  but  before  the  trial,  the  plaintiff  wrote  above 
the  blank  indorsement  of  the  defendant,  a  promise  binding  the 
defendant  as  surety  of  the  said  Thomas  Creigh  and  L.  S.  Creigh  ;. 
that  the  bond  with  the  indorsement  thereon  is  as  follows : 

"On  or  before  the  first  of  March,   1861,  with  interest   from  the  first 
of  .March.   1S60,  we  or  either  of  us  bind  ourselves,  our  heirs,  etc.,  to  pay 


L'  CUARAXTV    AXD    Sl'RliTVSIIIP. 

Alexander    Fvearnes   the   ju^t   and   full   sum   of   two  thousand    dollars,   for 

value  received. 

"Witness  our  hands  and  seals  this  28th  of  Januarj',   i860. 

"Tho.mas    Creigh.     [seal] 
"Lewis  S.  Creigh."  [seal] 

"For  value  received,   I   herebj-  become  the  surety   of   Thomas   Creigh 
and  Lewis  S.  Creigh  as  obligors  in  the  within  bond. 

"W'.M.  H.  Montgomery." 

Tliat  tlie  (lel)t  r.g'aiii.^t  the  Lfeiglis  coukl  have  liecii  made  by  suit  in 
the  year  1861,  and  after  the  close  of  tlie  war  in  1865,  and  that  the 
said  Creighs  have  been  insolvent  since  i866,  and  that  since  that  time 
the  debt  could  not  have  l)een  made  off  of  them  by  suit.  L  jjon 
tiiese  facts  judgment  was  rendered  for  the  defendant.  The  plaint- 
itf  in  error  insists  that  the  judgment  is  erroneous,  because  upon 
the  facts  proved,  the  defendant  was  a  surety  or  maker  of  the  bond 
in  question  and  primarily  liable  for  its  payment,  while  it  is  insisted 
for  the  defendant  that  he  was  a  guarantor  merely  and  only  liable 
for  the  payment  of  the  bond  in  case  the  money  could  not  be  made 
ofif  of  the  makers  of  the  paper  after  it  fell  due,  by  the  use  of  due 
diligence  which,  he  insists,  was  not  used  before  the  makers  became 
insolvent.  Whether  the  defendant  is  guaj:aiitQ!Lar_malv£n-dep^uiis_ 
on  the  understaiKJing  of  the  parties.  LLtlie.Tiajy'ee  or  a5si4^H€€ -oi— 
paper,  not  negotiable^, indorse,  his'  name  in.  blank  on  the Jjack^ot  it, 
.hLJ^-prijiLCL-facie  as5ignD.r^_biLLii_a  stranger  mdorse  his  name  in 
blank jQn -the  back  of  paper,  not  negotiable,  he  is  prima  facie  guar- 
antor :  but  this  prestnnption  may  be  rebutted -i)y-Jsho.vdu^.  the 
original  understanding  of  the  parties,  by  showing  an^express 
agreement  otherwi£e^orj3y_ showing  circumstances  from  which 
oue-niay  be  inferred. 

The  contract  of  a  guarantor  is  collateral  and  secondary.  It 
di tiers  in  that  respect  generally  from  the  contract  of  a  surety 
which  is  direct ;  and  in  general  the  guarantor  contracts  to  pay  if, 
bv  the  use  of  due  diligence,  the  debt  cannot  be  made  out  of  the 
l^nncipal  debtor,  while  the  surety  undertakes  directly  for  the  pay- 
ment and  so  is  responsible  at  once  if  the  principal  debtor  makes 
default.  As  the  proper  diligence  was  not  used  against  the  Creighs, 
if  the  defendant  is  guarantor  merely  he  is  not  liable  for  the  pay- 
ment of  the  debt;  while  if  he  is  to  be  treated  as  surety,  he  is  liable. 
It  becomes,  therefore,  necessary  to  determine  whether  he  is  a 
technical  guarantor  merely  or  a  surety.  * 

The  plaintifif,  after  suit  brought,  wrote  over  the  name  of  the 
defendant,  "For  value  received,   I   hereby  become  the   surety  of 


SAIXT   VS.    WIIEELRR.  6 

Thomas  Creigli  and  Lewis  S.  Creigh  as  obligors  in  the  within 
bond."  It  is  upon  this  contract,  so  written  by  the  plaintiff,  that 
he  claims  his  right  to  recover  from  the  defendant.  The  plaintiff 
might  write  anything  over  the  name  of  the  defendant,  consistent 
with  the  contract  of  the  defendant,  so  as  to  carry  it 'out.  He  could 
not  write  the  words  which  he  did  write,  unless  upon  special  con- 
tract between  the  parties,  disclosed  by  the  evidence  and  surround- 
ing circumstances.  The  evidence,  instead  of  sustaining  and  au- 
thorizing this  special  contract  as  written  by  the  plaintifif,  does  not 
even  tend  to  show  any  such  understanding,  but  on  the  contrary 
shows,  so  far  as  can  be  inferred  from  it,  that  the  defendant  was 
to  assume  the  same  situation  as  to  liability  that  he  would  have 
occupied  if  the  paper  had  been  executed  to  him  as  payee  and  trans- 
ferred bv  him  to  the  plaintiff.  As  the  facts  proved  wholly  fail  to 
show'  a  contract  on  the  part  of  the  defendant  to  be  liable  as  maker 
or  surety,  it  follows  that  he  is  liable  only  as  guarantor. 

The  facts  proved  show^  affirmatively  that,  by  the  use  of  due 
diligence  against  the  Creighs,  the  plaintiff  might  have  made  the 
money. 

The  judgment  complained  of  will,  therefore,  have  to  be  af- 
firmed with  damages  and  costs. 


The  concurring  oi>inion  of  Brown,  Pres't,  is  omitted. 


Saint  ct.  a!,  rs.  Wheeler  &  Wilson  Mfg.  Co.  (1891). 
95  Ala.  362;  36  Am.  St.  R.  210;  10  So.  539. 

Action  bv  Wheeler  &  Wilson  Mfg.  Co.  against  R.  F.  Saint, 
A.  J.  Crosthwait,  C.  M.  Wright,  J.  F.  Hall  and  J.  R.  Spragins, 
parties  to  a  contract  under  seal,  in  the  words  and  figures  following: 

"For  value  received  and  in  consideration  of  the  within  contract,  R.  F. 
Saint  (and  the  other  defendants,  giving  their  names  and  residences  re- 
spectively), hereby  guarantee  to  the  Wheeler  &  Wilson  Mfg.  Co.,  its  suc- 
cessors or  assigns,  the  full  and  faithful  performance  of  the  foregoing  con- 
tract, including  all  damages  which  may  result  to  the  said  company  from 
any  failure  on  the  part  of  said  R.  F.  Saitit  to  perform  any  of  the  provisions 
of  said  agreement  to  the  amount  of  $1,000;  hereby  waiving  all  necessity 
on  the  part  of  said  company  of  instituting  legal  proceedings  against  said 
R.  F.  Saint  before  having  recourse  on  us;  hereby  waiving  the  benefit  of 


4  GUARANTY    AND    SUK1:TVSIIIP. 

all  constitutional  or  statnlory  homestead  or  exemption  laws  now  in  force; 
further  agreeing  to  pay  plaintiff's  attorney's  fees  and  all  costs  should  suit 
he  necessary  to  enforce  the  collection  of  this  hond. 
"Witness  our  hands  and  seals,  etc." 

This  contract  or  Ixnid  was  wrillcn  on  the  I)ack  of  the  contract 
therein  referred  to.  by  which  said  company,  as  party  of  the  first 
part,  employed  said  Saint,  party  of  the  second  part,  as  its  col- 
lector, which  contract  sttstained  these  provisions,  among  others : 

1.  The  party  of  the  first  part  (Wheeler  &  Wilson  Mfg.  Co.) 
agreed  to  employ  the  party  of  the  second  part  as  its  collector. 

2.  The  party  of  the  seccjnd  part  is  to  engage  in  no  other  busi- 
ness but  to  devote  his  time  exclusively  to  collecting  claims  given 
him  from  time  to  time  by  the  party  of  the  first  part. 

3.  'I'he  party  of  the  second  part  agrees  to  remit  to  the  party 
of  the  first  jxirt  on  Saturday  of  each  week  the  full  amount  of  all 
collections  made  b\'  him. 

4.  All  notes,  leases  and  cash  received  by  the  party  of  the 
second  part  on  account  of  the  party  of  the  first  i)art  shall  be  held 
and  rendered  strictly  as  the  ]:)roperty  of  the  said  party  of  the  first 
part  subject  to  their  order  and  tinder  their  control. 

6.  The  party  of  the  second  part  is  to  receive  as  full  cimhixmi- 
sation  for  his  services  under  this  agreement,  a  salary  of  $50  per 
month  and  necessary  traveling  expenses  '■'  '-'■'  "'■'. 

All  the  defendants  filed  the  plea  of  the  general  issue.  The 
other  sureties  on  the  bond  filed  separate  ])leas.  twenty-two  in  num- 
ber,  inchiding  those  to  which   demtirrers  were  sustained. 

A.  |.  C'rosthwait  se]xirately  pleaded  that,  before  Saint  had 
entered  011  the  discharge  of  his  duties  as  collector,  he  notified 
plaintifi"  to  take  his  name  off  the  bond — that  he  would  not  ])econie 
a  surety  on  the  bond:  that  the  ]:)laintifi'  made  no  objection  and  he 
was  thereby  released  from  an\-  obligation  on  the  liond.  The  other 
sureties  on  the  bond  filed  a  separate  plea  that  they  signed  the  bond 
with  the  understanding  that  Crosthwait  was  also  jointly  liable 
with  them  on  the  bond  and  that  a  release  of  Crosthwait  on  the  bond 
without  their  consent  released  them.'' 

The  evidence  introduced  on  the  trial  of  die  case  established 
the  following  facts :  1'hat  the  above  contract  was  executed  by  the 
plaintiff  and  R.  V.  Saint  and  the  bond  was  executed  by  the  de- 
fendants. Wright.  Crosthwait,  1  hill  and  Spragins,  as  sureties  on 
the  bond.     That  Saint  received   from  the  plaintiff  a  large  list  of 


'The  other  pleas  of  the  defendant   and  the   further  statement  of   facts  are  omitted. 


SAfNT  \'s.  \\'nFj':r.i-:K.  5 

notes  and  accounts  for  collection ;  that  he  collected  a  considerahle 
amount  of  money  for  it.  paying  over  a  portion  of  it  and  retaining 
or  enibezzling  the  balance  of  it.  After  the  l)on(l  was  executed, 
Saint  carried  it  or  sent  it  to  Nashville  to  the  plaintiff;  that  when 
Saint  went  to  Nashville  to  begin  work  under  the  contract  and 
before  he  had  reached  that  place  or  had  received  any  notes  or 
accoimts  from  the  plaintiff.  Crosthwait  notified  plaintiff  to  take 
his  name  oft"  the  bond,  which  was  a  revocation  of  his  guaranty, 
and,  plaintiff"  not  having  refused,  he  regarded  himself  released. 
I'laintiff"  did  not  decline  to  release  him  but  simply  asked  his  rea- 
sons ;  and  after  that  plaintiff  gave  Saint  the  notes  and  accounts 
to  collect.  That  when  Saint  went  to  Nashville  to  take  charge  of 
the  work  assigned  to  him  imder  the  contract,  the  original  con- 
tract was  changed  and  Saint  was  permitted  to  retain  from  his 
weekly  collections  all  his  expenses  and  a  salary  of  $50  per  month 
instead  of  remitting  to  plaintiff  the  full  amount  of  his  collections. 
That  in  February,  18S8,  the  plaintiff",  through  W.  W.  Walls,  made 
another  change  in  the  contract,  whereby  Saint  was  to  get  only 
$9  per  week  instead  of  $50  per  month  for  his  services  as  collector, 
and  that  Saint  worked  under  this  last  contract  until  he  quit,  but,  on 
a  settlement  he  made  with  the  company  through  Walls,  he  was 
allowed  $50  per  month.  That  Saint  was  required  to  sell  and  dis- 
count notes  and  accounts  which  had  been  put  in  his  hands  for 
collection  under  the  contract.  That  he  was  required  to  take  up 
the  sewing  machines  and  sell  them  again  for  such  prices  as  he 
could  get  for  them,  and  that  he  did  take  up  some  machines  for 
the  plaintiff,  but  did  not  know  how  many,  and  sold  some  of  them 
under  instructions  from  the  plaintiff.  That  Wright.  Hall  and 
Spragins  knew  nothing  about  Crosthwait  revoking  his  guaranty 
on  the  bond  :  that  they  signed  it  with  the  understanding  and  agree- 
ment that  Crosthv;ait  was  jointly  liable  with  them.  It  was  also 
proved  that  in  February,  1888,  the  plaintiff,  through  its  agent, 
had  notice  of  Saint's  defalcation  and  that  after  such  notice  said 
company  continued  Saint  iii  its  employment.  The  defendants 
knew  nothing  about  the  changes  made  in  this  contract  between 
Saint  and  the  plaintiff  after  the  bond  was  signed.  They  never 
consented  to  anv  of  the  changes.  The  plaintiff'  never  notified  either 
of  them  of  Saint's  dishonest  act  in  appropriating  the  plaintiff"s 
money.  Defendants  then  off"cred  to  prove  by  each  of  the  defend- 
ants that  they  had  not  consented  to  a  change  in  the  contract  and 
had  no  knowledge  of  such  change. 


6  GUARANTY    AND    SURETYSHIP. 

Defendants  introduced  as  evidence  a  number  of  letters  written 
by  plaintiff  to  tbc  defendant,  R.  F.  Saint,  in  whicb  tbey  authorized 
him  to  discount  notes  and  use  his  discretion.  All  the  letters  show 
that  Saint  was  required  to  do  other  work  than  that  required  under 
the  written  contract ;  all  of  which  increased  the  risk  which  the 
sureties  had  incurred. 

In  addition  to  the  other  charges  requested  by  the  defendant 
in  writing  were  the  following: 

5.  "If  the  jury  believe  from  the  evidence  that  in  February, 
1888,  Saint  had  only  used  $50  or  $60  of  the  plaintiff's  money, 
and  that  Saint  notified  the  plaintiff  that  he  was  short  that  amount, 
then  it  was  the  duty  of  the  plaintiff  to  notify  the  sureties,  Wright, 
Crosthwait,  Hall  and  Spragins,  and,  if  the  plaintiff  failed  to  notify 
them  of  such  fact,  they  cannot  recover  against  these  sureties  for 
any  defalcation  of  Saint  after  that  time." 

7.  "If  the  jury  believe  from  the  evidence  that  A.  J.  Crosth- 
wait was  released  from  the  bond  as  guaranty  after  the  other  sure- 
ties, Wright,  Crosthwait,  Hall  and  Spragins  had  signed  it,  then  I 
charge  you  that  such  release  was  a  material  change  in  the  con- 
tract. And  if  vou  further  believe  from  the  evidence  that  such 
change  was  made  without  the  knowledge  and  consent  of  Wright, 
Hall,  and  Spragins.  and  Crosthwait.  then  the  plaintiff  cannot  re- 
cover against  them."" 

9.  "If  the  jury  believe  from  the  evidence  that  in  February, 
1888,  the  plaintiff  had  notice  that  defendant,  Saint,  had  collected 
money  for  it  wdiich  he  had  converted  to  his  own  use,  then  it  was 
the  duty  of  the  ])laintiff  to  notify  Wright,  Hall,  Crosthwait,  and 
Spragins,  his  securities,  and  if  it  failed  to  notify  them,  the  plaintiff 
cannot  recover  against  said  sureties  for  the  money  collected  and 
appropriated  to  his  own  use  after  the  time.'' 

The  defendants  separately  exceptcrl  to  the  court's  refusal  to 
give  the  several  charges  recfuested  l)y  them  *  ■''  '■'■'. 

There  were  verdict  and  judgment  for  the  plaintiff".  Defend- 
ants appeal. 

Kirk  &  Alinoii,  for  appellants. 

Roulhac  &  Nathan,  for  appellee. 

McClellax,  J.  The  contract  sued  is  not  a  guaranty,  but 
one  of  suretyship.  Crosthwait  and  the  other  defendants,  who 
undertake  that  Saint  shall  faith. fully  perform  his  contract  with  the 
company,  are  sureties  of  Saint  and  not  guarantors.  The  distinc- 
tion between  the  two  classes  of  undertakings  is  often  shadowy, 


■      SAINT   VS.    WIIKFiLER.  i 

and  often  not  observed  by  judges  and  text-writers;  but  that  there 
is  a  substantive  distinction,  involving  not  infrequently  important 
consequences,  is,  of  course,  not  to  be  doubted.     It  seems  to  lie  in 
this :  that  when  the  sponsors  for  another  assume  a  primary  and 
direct  liability,  whether  conditional  or  not,  in  the  sense  of  being 
immediate  or  postponed  till  some  subsequent  occurrence,   to  the 
creditor,  thev  are  sureties ;  but  when  this  responsil)ility  is  second- 
ary, and  collateral  to  that  of  the  principal,  they  are  guarantors. 
Or,  as  otherwise  stated,  if  they  undertake  to  pay  money  or  to  do 
anv  other  act  in  the  event  their  principal  fails  therein,  they  are 
sureties  :  but,  if  thev  assume  the  performance  only  in  the  event 
the  principal  is  unabie  to  perform,  they  are  guarantors.     Or,  yet 
another  and  more  concise  statement,  a  surety  is  one  who  under- 
takes to  pay  if  the  debtor  do  not ;  a  guarantor,  if  the  debtor  can- 
not.    The  first  is  sponsor  absolutely  and  directly   for  the  prin- 
cipal's acts;  the  latter,  only  for  the  principal's  ability  to  do  the 
act.     "The  one  is  the  insurer  of  the  debt ;  the  other,  an  insurer  of 
the  insolvency  of  the  debtor."     This  is  the  essential  distinction. 
There  is  another,   going  as  well  to   its  form.     The  contract  of 
suretyship  is  the  joint  and  several  contract  of  the  i)rincipal  and 
surety.     "The  contract  of  the  guarantor  is  his  own  separate  un- 
dertaking, in  wdiich  the  principal  does  not  join."     Indeed,  it  has 
been   held,   pretermitting   all   other   considerations,   that    no   con- 
tract joined  in  by  the  debtor  and  another  can  be  one  of  guaranty 
on  the  part  of  the  latter.    {McMillan  v.  Bank,  32  Ind.  11,  10  Amer. 
Law  Reg.,  N.  S.,  435,  and  notes.)    Though  we  apprehend  that  a 
case  might  be  put,  involving  only  secondary  liability  on  the  spon- 
sors,  though   the   uiidertakmg  be   signed   also  by   the   principal. 
However  that  may  be,  it  is  certain  that  in  most  cases  the  joint 
execution  of  a  contract  by  the  principal  and  another  operates  to 
exclude  the  idea  of  a  guaranty,  and  that  in  all  cases  such  fact  is 
an  index  pointing  to  a  suretyship.     See  Brandt,  Sur.  Sections  i, 
2 ;  9  Amer.  &  Eng.  Enc.  Law,  p.  68 ;  Marbcrgcr  v.  Pott,  16  Pa. 
St.  9;  AUcn  V.  Hubert,  49  Pa.  St.  259;  Reigart  v.  JVhite,  52  Pa. 
St.  438;  Kramph's  Ex'r  v.  Hat:;'s  Ex'r,  Id.  525:  Binisall  v.  Hca- 
cock,   18  Amer.  Law  Reg.    (N.  S.)   751,  and  notes;  Hartinan  v. 
Bank,  103  Pa.  St.  581:  Courtis  v.  Dennis,  7  Mete.  (Mass.)   510; 
Kearnes  v.  Montgomery,  4  W.  Va.  29:  Walker  v.  Forbes,  25  Ala. 

139. 

Applying  these  principles  to  the  bond  sued  on,  the  conclusion 
must  be  that  it  is  not  a  guarantv,  Init  a  contract  of  suretyship,  on 


8  GL'ARAXTV    AND    SURETYSHIP. 

the  part  of  Crosthwait,  Wright,  Hall  and  Spragins.  It  is  not 
their  separate  unciertaking".  hut  the  principal  also  executes  it. 
While  they  employ  the  word  "guaranty,"  they  directly  ohligate 
themselves,  along  with  Saint,  to  pay — ahsolutely  and  wholly, 
irrespective  of  Saint's  solvency  or  insolvency — all  damages  which 
may  result  to  the  obligee  from  his  default.  Not  only  so,  but  they 
expressly  stipulate  that  the  oMiipany  need  not  exhaust  its  rem- 
edies against  Saint  before  proceeding  against  them.  It  is,  in  other 
words,  and  in  short,  a  jirimary  undertaking  on  their  part — not 
secondary  and  collateral — to  pay  to  the  compan}'  in  the  event  of 
Saint's  failure,  and  not  an  undertaking  to  pay  only  in  the  event  of 
Saint's  default  and  inability  to  pay.  They  are  sureties  of  Saint, 
and  not  his  guarantcn^s ;  and  tlirir  rights  depend  ui)()n  the  law 
applicable  to  the  former  relation,  and  ncjt  upon  the  law  controlling 
the  latter.  ( )ne  ui  the  im])ortant  differences  in  the  operation, 
effect,  and  discharge  of  the  two  contracts  finds  illustration  in  this 
ca.se.  The  undertaking  of  guaranty,  in  a  case  like  this,  is  primar- 
ilv  an  olYer.  and  does  not  beccMue  a  binding  obligation  until  it  is 
accepted  and  notice  of  acceptance  has  been  given  to  the  guarantor. 
Till  this  has  been  done,  it  cannot  be  said  that  there  has  been  that 
meeting  of  the  minds  of  the  parties  which  is  essential  to  all  con- 
tracts. Machine  Co.  v.  Richards,  115  L".  S.  524,  6  Su]).  Ct.  Rep. 
173;  Walker  V.  Forbes,  25  Ala.  139.  l.eing  thus  a  mere  offer  it 
may  be  recalled,  as,  of  course,  at  any  time  before  notice  of  accept- 
ance. Indeed,  there  are  authorities  which  hold  that  even  after 
acceptance,  and  notice  thereof,  the  guarantor  may  revoke  it  by 
notice  that  he  will  no  longer  be  bound,  unless  he  has  received  a 
continuing  or  independent  consideration  which  he  does  not  re- 
nounce, or  unless  the  guarantee  has  acted  ujxjn  it  in  such  way 
as  that  revocation  would  be  inecpntable  and  to  his  detriment ;  and, 
in  cases  of  continuing  guaranty,  the  effect  of  such  revocation  is 
to  confine  the  guarantor's  liability  to  past  tran.sactions.  2  l*ars. 
Cont.  30;  .-ilhvi  V.  Kcjuiiiig,  9  Bing.  618;  Offord  v.  Davics,  12  C. 
I'..  (  .\.  S.)  748;  Tischlcr  v.  Hofhcimer,  (  \a.)  4  S.  E.  Rep.  370. 
All  this  is  otherwise  with  respect  to  the  contract  of  a  surety.  He  is 
bound  originally,  in  all  respects,  u]Hin  the  same  footing  as  the 
principal.  His  is  not  an  off'er  de])ending  for  efficacy  upon  accept- 
ance, but  an  absolute  contract,  de])ending  for  efficacy  upon  com- 
plete execution  ;  and  its  execution  is  conijjleted  ])y  deliver}-,  broin 
that  moment  his  liability  continues  until  discharged  in  accordance 
with  stipulations  of  the  instrument,  or  by  some  unauthorized  act 


SAINT    VS.    WHEELER.  1) 

or  omission  of  the  obli.^ee  violative  of  his  rights  under  the  instru- 
ment, or  by  a  vaHd  release.  Nothing-  that  he  can  do  outside  of  the 
letter  of  the  bond  can  free  him  from  ihe  duties  and  liabilities  it 
imposes.  He  cannot  assert  the  right  to  revoke  unless  the  right  is 
therein  nominated.  As  was  said  by  the  English  court,  if  he 
desired  to  have  the  right  to  terminate  his  suretyship  on  notice,  he 
should  have  so  specified  in  his  contract.  Cali'crf  v.  Gordon.  3 
Man.  &  R..  124:  Brandt,  Sur.  Sec.  113,  114. 

The  evidence  here  as  to  the  release  of  Crosthwait  tends  to 
show  no  more  than  this :  That  after  the  bond  had  been  delivered 
to  plaintiff,  and  after  its  officers  had  advised  Saint  that  they  were 
ready  for  him  to  enter  on  the  discharge  of  his  duties  under  the 
contract  secured  by  the  bond,  ite  (Crosthwait)  requested  plaintiff' 
to  take  his  name  off  the  paper.  No  assent  to  this  request  is 
shown,  but  only  an  inquiry  on  the  part  of  plaintiff'  as  to  Crosth- 
waite's  reasons  for  desiring  to  be  released.  It  would  seem  that  the 
court  itself  should  have  decided  that  these  facts  did  not  release 
Crosthwaite,  but  the  question  appears  to  have  been  submitted  to 
the  jury.  If  this  submission,  or  any  of  the  instructions  accom- 
panying it,  was  erroneous,  no  injury  resulted  to  defendants,  since 
the  jury  determined  the  point  against  the  alleged  release,  as  the 
court  should  have  done,  assuming  it  to  have  been  a  question  of 
law.  On  the  other  hand,  if  it  were  a  question  for  the  jury,  it  is 
to  be  presumed  they  were  properly  instructed  as  to  the  rules  of 
law  which  should  guide  them  to  its  solution,  as  no  exceptions  were 
reserved  in  that  regard.  The  exceptions  which  were  reserved  on 
this  part  of  the  case  are  to  charges  given,  and  to  the  refusal  to^ 
give  charges  asked  by  defendants  declaratory  of  the  effect  which 
the  discharge  of  Crosthwaite,  if  the  jury  found  he  had  been  dis- 
charged, would  have  upon  the  liability  of  his  co-sureties.  As  the 
jury  found  expressly  that  he  had  not  been  discharged,  these  ex- 
ceptions present  mere  abstractions  not  necessary  to  be  decided. 
We  have  no  doubt,  however,  but  that  che  law  in  this  respect  was 
correctly  declared  by  the  court  to  be  that  the  release  of  Crosth- 
waite operated  to  release  the  other  sureties  only  to  the  extent  of 
his  aliqtiot  share  of  the  liability. 

Brandt,  Sur.  Sec.  383:  Burge,  Sur.  3S6;  Kliiigciisiuitli  v. 
Klingensinitli,  31  Pa.  St.  460;  Ex  Parte  Gifford,  6  Ves.  805; 
Shock  v.  Miller,  10  Pa.  St.  401  ;  Currier  v.  Bokcr,  51  N.  H.  613; 
Governor  v.  Jeinison,  47  Ala.  390. 


10  GL'ARAN'l  ■^■    AND    SLKKTVSII I  T. 

The  sureties  of  Saint  insisted  un  tiie  trial  below  that  they 
were  discharged  from  all  liability  on  the  bond  by  reason  of  certain 
alleged  changes  made  in  the  original  contract  between  their  prni- 
cipal  and  the  company,  by  the  parties  thereto,  after  they  became 
sureties  for  its  faithful  performance,  and  without  their  knowledge, 
consent,  or  ratification.  It  is  not  pretended  that  the  paper  writing 
evidencing  this  contract  was  ever  altered  in  any  respect,  but  that 
its  terms  were  changed  by  subsequent  parol  agreements,  in  the 
following  respects,  among  others  to  be  presently  considered :  First, 
that  under  this  contract,  which  constituted  Saint  a  collector  only 
for  the  company,  he  was  instructed  and  required  to  take  up  and 
resell  sewing  machines  when  he  found  th.e  notes  for  the  purchase 
money  of  the  same,  and  which  were  in  his  hands  for  collection, 
could  not  be  collected ;  and,  second,  that  he  was  authorized  to  dis- 
count or  sell  the  notes  placed  in  his  hands  for  collection,  when  the 
same  could  not  be  otherwise  realized  upon.  Nothing  is  claimed 
in  this  action  on  account  of  Saint's  misconduct  in  respect  of  any 
property  thus  taken  up  or  resold,  or  of  any  note  discounted  by  him, 
or  wath  respect  to  the  proceeds  of  any  such  sale  or  discount.  If 
these  duties  were  such  as  usually  devolved  upon  a  collector  for  a 
sewing  machine  company, — as  to  which  there  is  no  evidence  in  this 
record,  and  no  necessity  for  any,  under  the  present  complaint, — 
it  may  be  that  Saint's  sureties  would  be  responsible  for  their  faith- 
ful performance  on  his  part  to  the  same  extent  as  for  money  col- 
lected on  notes  in  his  hands.  Bank  v.  Zicglcr,  49  Mich.  157,  13  N. 
W.  496. 

Jiowever  that  may  Ijc,  the  fact  that  they  were  imposed  upon 
him.  assuming  they  were  not  covered  by  his  contract,  and  hence 
were  in  addition  to  those  assured  l)y  the  other  defendants,  cannot 
relieve  his  surties  from  liability  with  respect  to  those  which  were 
imposed  by  the  contract,  unless  the  imposition  of  these  new  duties 
and  their  performance  by  Saint  rendered  impossible,  or  materially 
hindered  or  impeded,  the  proper  and  faithful  performance  of  the 
service  originally  undertaken.  There  is  no  evidence  here  that 
these  new  and  additional  duties  interfered  with  the  collection  of 
notes  placed  in  his  liands  for  that  purpose,  nor  is  any  claim  made 
against  his  sureties  on  account  of  any  failure  to  collect  such  notes. 
But  the  gravamen  of  the  action  is  that  he  ( 1  )  did  collect  these 
notes,  and  converted  the  proceeds  to  his  own  use;  or  (2)  that 
he  failed  to  deliver  such  notes  to  the  company  on  the  termination 
of  his  employment.    We  are  unable  to  conceive  how  the  fact  that 


SAINT    VS.    WHEELER.  11- 

he  had  other  property  and  funds — machines  and  the  proceeds  of 
discounted  notes — in  his  possession,  could  have  hindered  or  im- 
peded him  in  the  accounting  for  funds  collected  or  notes  remain- 
ing in  his  hands,  or  could  in  any  degree  have  conduced  to  his  con- 
version of  such  funds  or  notes.  To  the  contrary,  it  would  seem, 
in  all  reason,  that  the  possession  of  this  other  property  and  these 
other  funds,  out  of  which  he  might  have  met  the  necessities  which 
presumaljlv  induced  his  malversations,  would  have  lessened  the 
chances  of  misappropriation  of  the  funds  and  property  for  which 
his  sureties  were  responsible,  and  thus  have  lessened,  instead  of 
increased,  their  exposure  to  liability.  We  are  very  clear  to  the 
conclusion  that  the  imposition  of  these  new  duties,  not  covered  by 
the  contract,  did  not  discharge  the  sureties  with  respect  to  those 
embraced  in  the  contract,  and  as  to  which  no  change  in  the  partic- 
ulars we  are  considering  was  attempted. 

City  of  Xcz^'  York  v.  Kelly,  98  N.  Y.  467;  State  v.  Vilas, 
36  N.  V.  459;  Ills.  Co.  v.  Potter,  4  Mo.  App.  594;  Com.  v. 
Holmes,  25  Grat.  771  ;  Bank  v.  Traiibe,  75  Mo.  199;  Gaussen  v. 
U.  S.,  97  U.  S.  584 ;  .rones  v.  U.  S.,  18  Wall.  662 ;  Ryan  v.  Morton, 
65  Tex.  258;  Bank  v.  Oerke  (Md.),  13  Atl.  358,  6  Amer.  St.  R. 
453,  and  note,  458;  Bank  v.  Zeigler,  49  Mich.  157,  13  N.  W.  496. 
The  sureties  further  defended  on  the  ground  that  the  con- 
tract between  Saint  and  the  company  was  changed  without  their 
knowledge  or  assent  by  a  subsequent  parol  agreement  entered 
into  by  their  principal  and  Walls,  representing  the  company, 
whereby  Saint's  compensation  was  to  be  reduced  from  $50  per 
month  to  $9  per  week.  There  was  evidence  of  such  agreement 
but  none  that  it  was  supj^^rted  by  a  consideration  or  that  it  was 
approved  by  plaintifiF ;  and  it  appears  from  other  evidence  that  all 
of  Walls'  contracts  were  subject  to  approval  or  rejection  by  other 
officers  of  the  corporation,  and  that  plaintiff  settled  with  Saint  on 
a  basis  as  to  compensation  of  $50  per  month.  We  think,  on  these 
facts,  this  defense  is  wuuout  merit. 

Steele  v.  Mills,  68  Iowa.  460,  27  N.  W.  294. 
Equally  untenable,  in  our  opinion,  is  the  defense  which  pro- 
ceeds on  the  ground  that  the  instruction  of  plaintifif  to  Saint  to 
retain  his  salary  and  expenses  out  of  collections  made  by  him  was 
a  material  change  of  that  provision  of  the  contract  which  required 
him  to  remit  to  the  com.pany  on  the  last  day  of  each  week  the 
amount  collected  up  to  that  day.  The  contract  provided  for  Saint's 
compensation  and  expenses,  but  was  silent  as  to  the  manner  of 


12 


t.L'ARAXTN'      \.\1)    Sl-Ki:TVSlIll>. 


Ijavniciit.  Alclluul  of  paynunt  thus  adopted  tended  to  decrease  the 
risks  of  the  sureties,  as  affording;  less  occasion  for  conversion  l)v 
Saint  than  had  i)aynK'nts  to  him  been  made  only  at  the  end  of 
each  month.  It  is  well  settled  that  mere  indulgence  of  the  cred- 
itor to  the  principal,  tlie  mere  for!)earance  to  take  steps  to  enforce 
a  liability  upon  del'aiilt.  or  ev.n  an  understanding-  between  them 
looking  to  jiayment  of  the  dchcit  presently  due  at  some  time  in  the 
future,  which  does  not,  for  the  want  of  a  consideration  to  support 
it,  or  other  inlirmity.  i)revent  the  creditor  from  immediately  de- 
manding payment,  will  not  discharge  the  suret}-.  I  lence  what  took 
place  between  Walls  and  Saint  in  Feliruary.  i8(S8,  in  regard  to 
allowing  the  latter  furtiier  time  to  ntake  good  the  sum  he  had 
theretofore  converted,  afforded  no  defense  to  the  sureties  with 
respect  to  the  sum. then  due. 

3  lirick  Dig.,  p.  715,  Sec.  36-43;  o  Anier.  6e  b'ng.  Rnc.  Law, 
p.  83.  note  4;  Canal,  etc.,  Co.  v.  Van  I'orst,  21  X.  J.  Law,  100. 

The  sureties,  however,  on  another  aspect  of  the  transaction 
last  above  referred  to  between  Saint  and  Walls,  predicate  a  defense 
going  to  the  amount  of  their  liability.  Tliey  insist  that  Saint  was 
at  that  time  a  defaulter  ])y  embe/./.lruKiu  ;  that  Walls  knew  this 
fact,  and,  without  giving  any  notice  of  it  to  tlieni,  he,  acting  for 
the  company,  continued  Saint  in  its  employment,  and  committed 
other  lunds  to  him,  which  were  also  con.vertcd  :  and  that  this  action 
of  Walls  discharged  them  from  all  liability  for  funds  thus  con- 
verted after  he  knew  of  Saint's  di.shonesty.  The  general  principle 
here  relied  on  hnd.-  abundant  su.pjiort  in  the  authorities.  In  the 
leading  case  of  I'lullips  v.  I'o.vall.  L.  K.  7,  (J.  [).  666,  the  propo- 
sition is  tints  stated  by  (Juain,    ).: 

"We  think  that  in  a  case  of  continuing  guaranty  for  the  hon- 
esty of  a  servant,  if  the  master  discovers  that  the  servant  has  been 
guilty  of  acts  of  dishonesty  in  the  course  of  the  service  to  which 
the  guaranty  relates,  and  if.  instead  of  dismissing  the  servant,  as 
he  may  do  at  once  and  without  notice,  he  chooses  to  continue  in 
his  em])loy  a  dishonest  servant,  witlKuit  the  knowdedge  and  con- 
sent of  the  surety,  ex])ress  or  implied,  he  cannot  afterwards  have 
recourse'  to  the  surety  to  make  good  any  loss  which  uia\  arise  from 
the  dishonesty  of  the  servant  during  the  subse(|uent  service." 

.\nd  this  proposition  is  rested  upon  con.-,iderations  which,  to 
our  minds,  are  eminently  satisfactory.  Premising  that  had  a  de- 
fault involving  dishonesty,  and  occurring  before  the  surety  became 
boimd,  ])een  known   to  the  creditor,  and  concealed  bv  him   from 


SAINT    VS.    WHKELEK.  13- 

the  surety,  the  effect  would  have  beeu  to  discharge  the  surety, — a 
doctrine  which  appears  to  be  well  estal)lished, — the  court  proceeds 
to  declare  the  same  result  from  a  concealment  of  dishonesty  jjcnd- 
ing  a  continuing  guaranty,  as  follows :  "One  of  the  reasons  usually 
given  for  the  holding  that  such  a  concealment  ( at  the  time  the 
surety  enters  into  the  obligation)  would  discharge  the  surety  is 
that  it  is  only  reasonable  to  suppose  that  such  a  fact,  if  known  tO' 
him,  would  necessarily  have  influenced  his  judgment  as  to  whether 
he  would  enter  into  the  contract  or  not ;  and,  in  the  same  manner, 
it  seems  to  us  equally  reasonable  to  suppose  that  it  never  could 
have  entered  into  tlie  contemplation  of  the  parties  that  after  the 
servant's  dishonesty  in  the  service  had  been  discovered  the  guar- 
anty *  *  '•  should  continue  to  apply  to  his  future  conduct,  when 
the  master  chose,  for  his  own  pur])ose,  to  continue  the  servant  iit 
his  employ,  without  the  knowledge  or  assent  of  the  surety.  If 
the  obligation  of  the  surety  is  continuing,  we  think  the  obligation 
of  the  creditor  is  equally  so,  and  that  the  representation  and  under- 
standing on  which  the  contract  was  originally  founded  continue 
to  apply  to  it  during  its  continuance  and  until  its  termination." 

The  citations  supporting  this  conclusion  are  quasi  dicta  of 
Lord  Redesdale  in  Sinifh  v.  Bank,  i  Dow.  287,  and  of  Alalins, 
V.  C,  in  Burgess  v.  E-rc,  1..  R.  13,  Eq.  450;  but  tlie  case  was  sub- 
sequently followed  in  England  and  the  United  States,  and  no- 
where abstfactlv  doul)ted.  We  follow  these  authorities  and  adopt 
their  conclusions  as  sound  in  principle. 

Sanderson  v.  Aston,  L.  R.  8  Exch.  73;  Brandt.  Sur.  Sec. 
368;  Roberts  v.  Donovan.  70  Cal.  to8,  11  Pac.  R.  599;  Railroad 
Co.  v.  Gou\  59  Ga.  685:  Telegraph  Co.  v.  Barnes.  64  N.  Y.  385; 
Newark  v.  Sfouf.  52  X.  J.  Law.  35.  18  Atl.  <)43. 

Indeed,  the  foregoing  doctrine  is  not  controverted  in  this 
case,  luit  it  is  contended  that  it  has  no  application  as  between  a 
corporation,  being  the  creditor,  and  the  surety  of  one  of  its  officers 
or  employes;  and  there  are  not  a  few  adjudged  cases  which  sup- 
port this  view.  The  argunu  nt  u]ion  which  this  conclusion  is 
reached  is  that  "corporations  can  act  only  l)y  officers  and  agents. 
Thev  do  not  guaranty  to  the  sureties  of  one  officer  the  fidelity  of 
the  others.  The  fact  that  there  were  other  unfaithful  officers  and 
agents  of  the  corporation,  who  knew  and  connived  at  his  (the 
principal's)  in  fidelity,  ought  not  in  reason,  and  does  not  in  law 
or  equitv,  relieve  the  sureties  from  their  responsibility  for  him. 
They  undertake  that  he  shall  be  honest,  though  all  around  him  be 


H-i  GUARANTY    AND    SURKIVSIIIP. 

rogues.  Were  the  nile  different,  hy  a  conspiracy  between  the 
officers  of  a  bank  or  other  moneyed  institution  all  their  sureties 
niight  be  discharged.  It  is  imDossiblc  that  a  doctrine  leading-  to 
such  consequences  can  be  sound." 

Raikvay  Co.  v.  Shacffcr,  59  Pa.  St.  356;  Taylor  v.  Hank,  2 
J.  J.  Mansh,  565;  McShaiicy  v.  Bank,  {\U\.)  20  Atl.  776:  I'.randi. 
.Sur.  Sec.  369. 

It  is  to  be  ncjted  thai  these  cases — and  there  may  be  others 
which  follow  them — hold,  not  only  that,  where  there  is  a  con- 
spiracy between  the  officers  of  a  corporation  to  embezzle  its  funds, 
the  dereliction  of  neither  officer  will  discharge  the  sureties  of  the 
other,  but  also  where  there  is  a  negligent  failure  on  the  part  of  one 
.such  officer  to  give  notice  t(^  the  sureties  of  another  of  his  dishon- 
esty, and  a  continuance  of  the  dishonest  servant  in  the  corporate 
service  without  the  assent  of  his  sureties,  given  with  a  knowledge 
of  the  default,  the  sureties  are  not  discharged  from  liability  for 
subsequent  deficits,  though  confessedly  they  would  be  were  the 
.creditor  an  individual  or  copartnership,  it  may  l)e  that  the  first 
position  stated  is  sound.  It  would  seem  to  be  immaterial  whether 
an  original  default  results  from  the  dishonesty  of  the  principal 
alone,  or  conjointly  from  his  and  the  dereliction  of  another  cor- 
porate employe.  The  sureties  are  bound  to  answer  for  the  results 
of  any  form  of  original  dishonesty.  That  is  what  they  insure 
against.  It  may  be,  too. — doubtless  would  be, — that  no  conceal- 
ment by  a  conspirator  of  the  fact  of  the  principal's  original  de-* 
fault,  no  continuance  in  the  service  by  an  officer  of  the  corpora- 
tion in  pari  delicto  with  the  principal,  would  suffice  to  discharge 
the  surety,  since  all  of  this  is  malversation  participated  in  by  the 
principal,  and  violative  of  the  contract  which  the  sureties  have 
undertaken  to  see  faithfully  performed.  Moreover,  the  acts  and 
(Omissions  of  one  agent  of  a  corporation,  in  conspiracy  with  an- 
other to  filch  their  common  master,  in  furtherance  of  their  nefari- 
ous purposes,  are,  in  the  n_ature  of  things,  without  authorization, 
by  im])lication  or  otherwise,  and  can  in  no  just  sense  be  said  to  be 
acts  or  omissions  of  the  corporation.  Upon  this  idea,  it  may  be 
that  where  one  officer,  though  not  originally  participating  in  the 
default  of  another,  conceals  that  default  from  the  sureties  of  his 
fellf)w-officer  and  from  the  company  for  sinister  purposes  of  his 
own,  and  not  as  rt^iresenting  his  employer  or  in  its  interest,  and 
■  continues  the  defaulting  officer  in  the  service,  the  sureties  would 
:not  be  discharged  as  to  subsequent  deficits.     This  far  we  may  go 


SAINT    VS.    WHEELER.  15 

with  the  learned  courts  in  which  the  cases  we  have  cited  were 
decided.  But  even  our  conserA^atism  in  following  adjudications 
of  courts  of  acknowledged  ability  and  learning  can  in  no  degree 
constrain  us  to  adopt  the  second  proposition  stated  above.  We 
cannot  subscribe  to  the  doctrine  that  there  is  the  radical  difference 
insisted  on,  or  any  material  dift'erence  in  fact,  between  the  efficacy 
of  acts  and  omissions  of  an  agent  of  a  creditor  corporation,  having 
authority  in  the  premises,  on  the  one  hand,  and  the  acts  and  omis- 
sions of  the  agent  of  an  individual  creditor,  or  of  the  individual 
himself,  on  the  other,  in  respect  of  condoning  the  defalcation  of  an 
employe,  omitting  notice  to  the  employe's  sureties,  and  continuing 
him  in  the  service,  to  operate  a  release  of  the  sureties  as  to  subse- 
quent deficits  of  the  dishonest  employe.  No  doctrine  of  the  law 
is  more  familiar  than  that  notice  to  an  agent,  within  the  scope  of 
his  agency,  is  notice  to  the  principal :  and  the  doctrine  has  in  no 
connection  been  applied  more  frequently  and  uniformly  than  to 
corporations  and  their  agents.  Indeed,  there  is  an  absolute  neces- 
sity in  all  cases  for  its  application  to  corporations,  since  they  act 
and  can  be  dealt  with  only  through  agents.  Notice  to  one  agent 
of  a  corporation  with  respect  to  a  matter  covered  by  his  agency 
must  be  as  efficacious  as  to  its  directors  or  to  its  president,  since 
these  also  are  only  agents,  with  larger  powers  and  duties,  it  is  true, 
but  not  more  fully  charged  with  respect  to  the  particular  thing 
than  he  whose  authority  is  confined  to  that  one  thing.  In  the  case 
at  bar,  Walls  had  authority  to  make  the  contract  with  Saint,  sub- 
ject to  the  approval  of  another  agent  of  the  corporation.  He  did 
in  fact  make  it.  This  contract  contained  a  provision  for  its  ter- 
mination by  either  party  at  pleasure.  The  evidence  was  that 
Walls  had  full  supervision  over  Saint,  and  over  all  matters  em- 
braced in  the  contract  made  by  Saint.  It  was  at  least  a  fair  in- 
ference to  be  drawn  by  the  jury  that  he  could  terminate  the  em- 
ployment, either  under  the  stipulation  in  the  instrument,  or  for  a 
violation  of  it  by  Samt.  subject  to  the  approval  of  the  other  officer 
or  agent  referred  to.  There  is  no  ground  to  dotibt  but  that  to 
have  given  the  sureties  notice  of  Saint's  default  would  have  been 
in  the  line  of  his  duty  and  authority.  Equally  clear  it  must  be 
that  their  assent  to  him  to  a  continuance  of  Saint's  employ- 
ment would  have  bound  them  for  the  subsequent  defalcation; 
and  on  the  other  hand  it  must  be  that  their  dissent  from  such 
continuance,  communicated  to  him,  would  have  had  the  saiue 
effect  as  had  it  been  given  to  anv  other  officer  of  the  creditor  com- 


16  .  GUARANTY    AXD    SUKF-TYSITIP. 

pany.  He  liad  notice  of  the  default.  He  received  it  as  represent- 
ing- the  company.  In  that  cajjacily,  he  condoned  it,  made  arrant^e- 
ments  witli  Saint  to  make  it  good,  continued  the  employ- 
ment, and  thereby  continued  Saint's  opportunities  to  embezzle 
the  company's  funds,  on  the  supposed  security  for  its  reim- 
bursement atfordetl  by  the  ol)ligation  of  the  sureties,  who 
had  contracted  on  the  assumi)tion  of  Samt's  honesty,  and 
were  entitled  to  know  of  his  dishonesty,  when  it  should  de- 
velop, as  a  condition  to  their  sul)sec|uent  liability.  There  is  no 
intimation  of  connivance  or  conspiracy-  on  the  part  of  Walls  with 
Saint  to  defraud  either  the  creditor  or  the  sureties.  What  he  did 
was  doubtless  done  in  good  faith,  and  for  the  interest,  as  he  sup- 
posed, of  his  employer.  It  was  m  the  line  of  liis  employment.  If 
his  further  duty  was  to  report  his  action  to  another  officer  of 
the  company,  the  presumption  is  that  he  made  such  report.  There 
is  nothing  in  the  record  to  rebut  such  presumption.  We  cannot 
hesitate  to  affirm,  on  this  state  of  the  case,  that  wliat  he  did  which 
ought  not  to  have  been  done,  and  what  he  failed  to  do  which 
ought  to  have  been  done,  were  the  acts  and  omissions  of  the  cor- 
i:)oration.  involving  the  same  conse(|uences,  in  all  respects  as  if 
the  corporate  entity  had  been  ca])ab]e  of  direct  personal  action, 
so  to  speak,  and  had  acted  as  he  did,  or  as  if  he  himself,  and  not 
the  Wheeler  &  Wilson  ]\Ifg.  Co.,  had  been  the  creditor.  We  sup- 
pose it  would  not  lie  contended  in  any  ([uarter,  that  if  these  sure- 
ties had  in  terms  stipulated  that,  in  case  of  Saint's  default,  notice 
to  them,  and  assent  on  their  ])art,  should  be  a  condition  precedent 
to  their  liability  for  further  defaults,  they  could  be  held,  without 
such  notice  and  assent,  and  yet,  under  the  doctrine  announced 
in  the  cases  cited,  such  a  stipulation  would  be  entirely  nugatory, 
and  the  failure  of  every  agent  and  officer,  all  with  knowledge  of 
the  stipulation  and  of  the  default,  to  not  if  \-  the  sureties  thereof, 
would  avail  them  nothing.  Yet  it  would  manifestly  be  no  more 
the  duty  of  the  corporation  to  give  a  notice  so  stipulated  for  than 
to  give  a  notice  made  a  ])art  of  the  contract  by  the  law  of  the 
land.  And  such  doctrine,  carried  to  its  legitimate  results,  would 
defeat  all  corporate  liability  growing  out  of  the  contracts,  acts, 
and  omissions  of  agents  clothed  with  i)ower  and  authorit\-  in  the 
premises.  That  it  is  imsound  is  demonstrated,  not  only  in  logic, 
but  ui)on  analogous  authority.  As  we  have  seen,  the  English 
cotirt,  in  the  leading  case  of  Phillips  v.  Foxall,  supra. — which  has 
never  been  called  in  cpiestion  there  or  in  this  country,  either  as 


SAINT    VS.    WHEELER.  17 

to  the  result  or  the  reasoning  upon  which  it  was  reached, — sup- 
ported the  principle  declared  upon  the  same  considerations  which 
underlie  the  doctrine  that  if  an  employer  have  knowledge  of  the 
previous  dishonesty  of  a  servant,  and  accept  a  guaranty  for  his 
future  honesty  without  disclosing  such  knowledge  to  the  surety, 
this  is  a  fraud  upon  the  latter,  and  he  is  not  hound.  Now,  sup- 
pose an  officer  of  a  corporation,  charged  with  the  duty  of  finding 
surety  for  another  officer,  knowing  of  such  previous  dishonesty 
on  the  part  of  such  other  officer,  takes  hond  for  his  faithful  and 
honest  performance  of  the  services  contracted  for,  without  giving 
the  surety  notice  of  the  prior  dereliction.  Would  not  that  omis- 
sion of  duty  on  his  part  stand  upon  the  same  plane  hefore  the 
law,  and  involve  precisely  the  same  consequences,  as  if  the  default 
had  occurred  after  the  surety  has  bound  himself,  and  the  officer 
had  then  failed  to  give  him  notice  of  it?  If  the  corporation  is 
not  prejudiced  by  the  omission  in  one  instance,  can  it  be  in  the' 
other?  If  the  corporation  is  responsible  for  the  dereliction  of 
its  agent  with  respect  to  notice  of  a  previous  default,  would  it 
not  also  be  responsible  for  its  agent's  failure  to  give  notice  of  the 
subsequent  default  ?  There  can,  in  our  opinion,  be  but  one  answer 
to  these  questions.  There  can  be  no  possible  difference  in  the 
duty  of  the  agent  and  the  corporation's  liability  for  its  non-per- 
formance in  the  two  cases ;  and  the  law  is  well-settled  that  the 
failure  of  the  agent  of  a  corporation  to  give  notice  of  such  pre- 
vious dishonesty  avoids  the  obligation  of  the  sureties  for  future 
misconduct.  Singularly  enough,  too,  some  of  the  cases  holding 
this  doctrine  distinctly  and  broadly  were  decided  by  courts — ■ 
those  of  Pennsylvania  and  Kentucky — which  hold  the  contrary 
view  as  to  notice  of  after-occurring  embezzlement. 

Brandt,  Sur.  Sec.  365-368 ;  JVayuc  v.  Bank,  52  Pa.  St.  344 ;: 
Graves  v.  Bank,  10  Bush,  23;  Bank  v.  Cooper,  36  Me.  179,  39, 
Me.  542. 

Our  conclusion  on  this  point  is  further  supported  by  the 
cases  of  Railroad  Co.  v.  Gozc,  and  Telegraph  Co.  v.  Barnes,  snpra^ 
which,  without  discussing  this  point,  in  effect  hold  that  the  omis- 
sion of  an  oificer  of  a  corporation  to  notify  a  surety  of  the  default 
of  his  principal  in  a  case  like  this,  and  the  continuance  by  such 
officer  of  the  employment  of  the  principal,  will  discharge  the 
surety  as  to  all  defaults  arising  during  the  subsequent  service. 
And  in  Nezvark  v.  Siont,  52  N.  J.  Law%  35,  18  Atl.  943,  the  New 
Jersey  court,  while  adhering  generally  to  the  doctrine  we  have 
3 


18  GL'ARAXTV    AND    SURETYSHIP. 

been  criticising,  yet  held  that  if  the  default  and  dishonesty  of  a 
municipal  officer  be  brought  to  the  attention  of  the  city  council, 
which  is  clothed  with  the  power  to  remove  him,  and  he  is  allowed 
to  continue  in  the  service  without  notice  to  and  assent  on  the  part 
of  the  surety,  the  latter  will  be  discharged  from  liability  as  to  all 
subse(|ucnt   defaults.     It  tloes   not  appear   to  have  been   so  con- 
sidered by  that  court;   but  it   is  manifest  that  this  is  a   radical 
departure  from  the  doctrine  held  by  the  Pennsylvania,  Kentucky, 
Maryland,  and  other  courts,  and  relied  un  l)y  appellee  here,  and 
goes  strongly  in  support  of  the  contrary  rule,  which  we  believe 
to  be  the  sound  one.     It  is  also  to  be  noticed  that  much  reliance 
is  had  by  the  courts  holding  that  a  surety  of  one  officer  of  a  cor- 
poration is  not  discharged  by  the  acts  or  omissions  of  another, 
in  the  particulars  under  consideration,   on  cases   decided  by  the 
supreme  court  of  the  United  States  in  respect  of  sureties  of  public 
officers.     Indeed,  it  would  seem  that  this  whole  doctrine  had  its 
inception  in  this  class  of  cases.     This  can  but  be  considered  an 
infirmative  circumstance,  going  to  the  soundness  as  authority  of 
those  cases  which  involve  sureties  of  corporation  officers.     There 
is  a  palpal)le  and  manifest  distinction  between  the  two  classes  of 
cases  bearing  directly  upon  this  question,  which,  while  requiring 
the  application  of  diis  rule  to  public  officers  on  the  grounds  of 
public  policy,  and  that  laches  should  not  be  imputed  to  the  gov- 
ernment, does  not  require  its  application  to  officers  of  corporations. 
We  hold  that  it  Walls,  while  acting  for  the  corporation  and 
in  the  capacity  of  its  agent,  with  respect  to  the  matters  and  things 
involved  in  Saint's  contract,  received  notice  of  such  a  conversion 
of  its  funds  by  Samt  as  amounted  to  embezzlement  or  involved 
dishonesty,  and.  without  imparting  this  knowledge  to  the  sureties 
and  receiving  their  assent  thereto,  continued  him  in  the  service, 
the  sureties  are  not  liable  for  Saint's  subsequent  defaults.    Charges 
5.  9  and  7,  requested  for  defendants,  when  referred  to  the  evi- 
dence, were  correct  expositions  of  the  law,  as  we  understand,  in 
this  connection.     The  refusal  of  the  court  to  give  them  involved 
error  which  must  work  a  reversal  of  the  case.     Most  of  the  other 
assignments  of  error  are  covered  by  the  points  considered  in  the 
first  part  of  this  opinion.     Such  of  the  assignuK-nts   as  are  not 
discussed  have  been  considered,  and   found  to  be  without  merit. 
The  judgment  is  reversed,  and  the  cause  remanded. 


CASS  VS.  SHF\V>rAN.  19 

Cass  w.  Shew  man  (1891). 
61  Hun.  472;  16  N.  Y.  Supp.  236. 

Appeal  from  special  term.  Schuyler  county. 

Action  by  Alarcus  AI.  Cass  against  James  Shewman  to  recover 
on  a  guaranty  to  fulfill  the  conditions  of  a  lease  not  complied  with 
by  the  lessee.  Plaintiff  demurred  to  defendant's  answer.  The 
demurrer  being  overruled,  plaintiff  appeals.     Reversed. 

On  the  3d  April,  1888,  the  plaintilf'  and  one  Jennie  D.  Shew- 
man entered  into  a  written  agreement,  by  which  the  plaintiff  leased 
to  said  Shewman  his  farm  of  no  acres  for  the  term  of  three  years 
from  April  i,  1888,  at  the  annual  rent  of  $125,  payable  on  the  ist 
of  March  of  each  year.  It  was,  among  other  things,  provided  that 
Shewman,  the  party  of  the  second  part,  should  have  "firewood  and 
privilege  to  cut  and  use  posts  for  fencing  on  said  farm,  but  shall 
not  cut  standing  timber  until  down  timber  is  used  up;"  and  the 
partv  of  the  second  part  agreed  to  carry  on  the  farm  in  a  good  and 
farmer-like  manner.  Upon  the  same  occasion  and  in  connection 
■with  said  lease,  the  defendant  executed  and  delivered  to  plaintiff 
an  instrument,  of  which  the  following  is  a  copy : 

"For  a  valuable  consideration  to  me  paid  by  M.  M.  Cass,  the  receipt 
whereof  is  bereby  acknowledged,  I  hereby  agree  to  become  security  for 
the  fulfillment  of  the  above  lease  by  the  party  of  the  second  part,  hereby 
agreeing  to  fulfill  all  the  terms  and  conditions  of  said  lease  not  fulfilled 
by  said  party  of  the  second  part. 

"Witness  my  hand  this  .3rd  day  of  April,  1888. 

"James  Shewman." 

In  the  complaint  the  lease  and  the  guaranty  of  the  defendant 
are  set  out,  and  it  is  alleged  that  the  lessee  went  into  possession, 
and  that  the  year's  rent  of  S125  that  became  due  March  i,  1891, 
has  not  been  paid.  It  is  also  alleged  that  the  lessee  has  not  carried 
on  the  farm  in  a  good  and  farmer-like  manner,  has  committed 
waste,  has  torn  down  and  injured  fences,  has  injured  the  buildings, 
and  has  cut  down  and  appropriated  many  standing  trees,  contrary 
to  the  provisions  of  the  agreement,  thereby  damaging  the  plaintiff 
to  the  amount  of  $300,  which,  by  the  terms  of  the  agreement,  the 
lessee  is  liable  to  pay;  that  in  these  respects  the  lessee  has  made 
default,  and  has  failed  to  fulfill  the  agreement.  Judgment  is  de- 
manded against  the  defendant  for  $425.     In  the  fifth  count  or 


20  GUARANTY    AND    SL'RETVSll  IP. 

defense  in  the  answer  it  is  alleged  by  the  defendant  that  no  demand 
was  made  by  plaintiff  before  the  eommencement  of  this  aetion  of 
said  lessee  for  the  payment  of  said  rent,  or  for  the  performance 
on  her  part  of  the  conditions  and  provisions  in  said  lease  contained, 
alleged  in  the  complaint  to  have  been  broken  and  vii)lated  liy  her, 
or  for  compensation  in  damages  for  such  alleged  breach,  or  for  the 
injury  as  alleged  to  the  real  property;  that  plaintift'  had  taken  no 
steps  and  resorted  to  no  legal  remedy  against  the  lessee  to  recover 
the  said  rent,  and  for  damages  for  a  breach  of  perfonnance  of  the 
conditions  of  the  agreement,  and  had  not  exhausted  his  remedies, 
legal  or  otherwise,  against  the  lessee.  Jn  the  seventh  count  or 
defense  the  defendant  alleged  that  the  lease  or  agreement  set  forth 
in  the  complaint  was  void,  for  the  reason  that  it  was  not  sealed, 
acknowledged  or  witnessed.  The  plaintilf  demurred  to  the  fifth 
and  seventh  defenses  in  the  answer  on  the  ground  that  each  of  said 
answers  is  insufficient  in  law  upon  the  face  thereof,  and  neither 
contains  sufficient  facts  nor  allegations  to  constitute  a  defense.  The 
court  in  its  decision  sustained  the  demurrer  to  the  seventh  defense, 
giving  the  defendant  leave  to  amend  on  payment  of  costs  of  the 
demurrer,  but  overruled  the  denuirrer  to  the  fifth  defense,  and 
directed  an  interlocutory  judgiuent  to  that  effect.  The  court  at 
the  same  term  granted  an  order,  which  was  entered  July  2,  1891, 
directing  that  the  demurrer  to  the  fifth  count  be  overruled,  and  that 
"the  defendant  may  enter  judgment  herein,  dismissing  said  com- 
plaint with  costs,  which  judgment  shall  stand  upon  the  record  until 
the  trial  of  the  issue  joined  in  this  action,  and,  in  case  said  action 
shall  be  determined  in  favor  of  the  defendant,  said  judgiuent,  to- 
gether with  judgment  for  further  costs,  shall  stand  as  the  final 
judgment  in  this  action,  otherwise  to  be  of  no  force  and  effect." 

This  order  and  the  judgment  entered  in  pursuance  thereof  on 
the  Cth  July,   1891,  are  appealed  from. 

Argued  before  Hakdix,  1*.  j.,  and  Martin  and  M  i:k\\i.\,  J.  J. 

M.  M.  Cass,  Jr.,  for  ap])ellant. 

Culc  &  BqIvch,  for  respondent. 

Mkrwin,  J.  No  exceptions  to  the  decisions  of  the  court  were 
filed  by  the  appellant,  and  the  respondent  therefore  claims  that  the 
appellant  is  not  in  a  position  to  question  the  correctness  of  th'e 
decision.  The  cases  cited  to  sustain  this  view  of  the  practice  relate 
only  to  trials  of  issues  of  fact.     By  Sec.  992  of  the  Code  of  Civil 


CASS  VS.   SHEW  .MAN.  21 

Procedure  it  is  provided  that  "an  exception  may  be  taken  to  the 
ruHng  of  the  court  or  of  a  referee  upon  a  question  of  law  arising 
upon  the  trial  of  an  issue  of  fact."  The  manner  in  which  such  ex- 
ceptions shall  bo  taken  is  regulated  by  sections  994  and  995.  We 
are  referred  to  no  provision  of  the  Code,  or  tn  anv  authority,  which 
requires  exceptions  to  be  taken  to  the  decision  of  the  court  on  the 
trial  of  an  issue  of  law.  Under  the  former  Code,  the  practice,  as 
understood,  did  not  require  exceptions  in  such  a  case.  3  Wait,  Pr. 
232.     We  think  none  were  necessary. 

Upon  the  merits  of  the  demurrer,  the  claim  of  the  respondent, 
as  indicated  by  his  points,  is  that  he  is  not  liable  until  a  demand 
is  made  upon  the  principal  debtor,  and  that  "it  must  be  shown  that 
she  refused  to  fulfill  the  covenants,  and  the  surety  must  have  pre- 
vious notice,  and  a  demand  must  also  be  made  on  him,  so  that  he 
may  have  knowledge  of  the  breach,  and  an  opportunity  to  fulfill 
himself."  To  sustain  this  view  the  cases  of  McMiirray  v.  Noyes, 
72  N.  Y.  523 ;  Tolcs  v.  Adec,  91  N.  Y.  562 ;  Bank  v.  Livingston,  2 
Johns.  Cas.  409;  Ins.  Co.  v.  Ogden,  i  Wend.  137,  are  cited.  In 
the  McMurray  case  the  defendant,  upon  an  assignment  of  a  bond 
and  mortgage,  covenanted  that  if,  in  case  of  foreclosure  and  sale 
of  the  mortgaged  premises,  there  should  arise  a  deficiency,  he 
would  pay  the  same  on  demand.  In  an  action  on  this  guaranty  it 
was  held  that  the  foreclosure  and  sale  were  conditions  precedent, 
to  be  performed  w-ith  due  diligence  in  order  to  establish  the  liability 
of  the  guarantor.  Tolcs  v.  Adec  was  an  action  upon  an  undertak- 
ing given  upon  the  discharge  of  a  defendant  from  an  order  of 
arrest,  and  conditioned  that  the  party  discharged  would  at  all  times 
hold  himself  amenable  to  process  issued  to  enforce  the  judgment. 
It  was  held  that  the  entry  of  judgment  and  issuing  of  process 
against  the  principal  debtor  were  conditions  precedent  to  the  liabil- 
ity of  the  surety,  and  that  a  neglect  to  perform  such  conditions  with 
due  diligence  discharged  the  surety.  In  Bank  v.  Livingston  there 
was  an  absolute  guaranty  of  repayment  of  certain  moneys  advanced 
to  a  committee.  The  only  question  raised  was  whether  the  commit- 
tee should  have  been  first  sued,  and  it  was  held  that  this  was  not 
necessary.  In  Ins.  Co.  v.  Ogdcn  the  defendant  had  assigned  to 
plaintifi:  certain  contracts,  and  covenanted  that  the  sum  set  oppo- 
site to  each  contract  in  a  statement  annexed  was  then  justly  due 
thereon,  and  that  "each  and  every  sum  should  be  well  and  truly 
paid  to  the  plaintiffs,  with  the  interest  on  each  respectively."  It 
was  held  that  plaintiffs  could  not  call  on  defendant  for  payment 


22  GUARANTY  AND  SURETYSHIP. 

without  first  making  demand  of  those  who  signed  the  cunlracls,  Imt 
that  it  was  not  necessary  to  bring  suit  against  them.  The  first  two 
cases  are  clearly  distinguishable  from  the  present.  In  those  some- 
thing was  to  be  done  by  the  creditor  before  the  liability  of  the 
surety  was  determined.  Here  the  liability  attached  aiid  was  deter- 
mined the  moment  the  lessee  failed  to  perform  his  duty,  and  the 
liability  of  the  surety  was  as  extensive  as  that  of  the  lesee.  I'oth. 
Obi.  404.  The  case  in  i  Wend,  sustains  somewhat  the  position 
of  the  defendant,  but  other  cases  are  in  a  different  direction.  In 
Allan  V.  Rightmerc,  20  Johns.  365.  there  was  a  guaranty  by  the 
defendant  of  the  payment  of  a  note,  and  it  was  held  not  to  be 
necessary  to  make  a  demand  of  the  maker  before  suing  the  defend- 
ant ;  it  being  said  that  the  undertaking  of  the  defendant  was  that 
the  maker  should  pay  the  note  when  due,  or  that  the  defendant 
would  pay  it  himself. 

The  doctrine  of  this  case  was  followed  and  established  by 
the  court  of  appeals  in  Brozvn  v.  Curfiss,  2  N.  Y.  225.  In  Mann  v. 
Eckford's  Exrs.,  15  Wend.  502.  the  obligation  sued  on  was  a  bond 
of  defendant's  testator,  conditioned  that  one  Gibbons  "should  punc- 
tually satisfy  and  pay  to  the  Aetna  Ins.  Co."  the  amount  of  a  cer- 
tain bond  and  mortgage  executed  by  Gibbons,  and  upon  which  the 
company  had  advanced  the  money,  with  interest  as  the  same  should 
become  due.  It  was  held  not  to  be  necessary  for  the  plaintiff  to 
prove  a  demand  upon  Gil)bqiis  for  payment  of  the  money  and  notice 
to  the  obligator  or  to  defendants,  it  being  said  that,  if  a  person 
make  an  unconditional  engagement  for  the  act  of  a  third  person, 
the  contract  will  be  broken  if  that  person  fails  to  do  the  act.  In 
Douglas  V.  Hozi'land,  24  Wend.  35.  there  was  an  agreement  be- 
tween plaintiff  and  one  Bingham,  whereby,  among  other  things, 
Bingham  agreed  to  pay  the  plaintiff'  such  sum  as  should  be  found 
due  upon  an  accounting  provided  for  in  the  agreement.  Under- 
neath the  agreement  the  defendant  executed  an  instrument  by 
which  he  covenanted  that  Ihngham  should  "well  and  faithfully 
perform  on  his  part  the  above  agreement,"  it  was  held  that  defend- 
ant was  not  entitled  to'  notice  before  action  of  Bingham's  default. 
Among  other  cases  there  cited  was  the  case  of  Brookhank  v.  Tay- 
lor, Cro.  Jac.  685,  where  the  promise  was  that  the  defendant  w^ould 
pay  the  plaintiff  the  rent  due  from  another,  if  the  latter  did  not  pay 
it,  and  it  w^as  held  that  the  defendant  nnist  notice  the  non-]xiymcnt 
at  his  peril. 


CASS  VS.   SHEW.MA.V. 


23 


In  Bank  v.  Rogers,  7  Bosw.  493,  the  plaintill  made  a  loan  to 
one  Chase,  payahle  in  60  days,  and  the  defendant  promised  that, 
if  Chase  failed  to  repay  the  amount,  with  interest,  within  60  days, 
"then  and  in  such  case  the  defendant  will  become  answerable  to  the 
plaintiffs  for  such  repayment  after  30  days'  notice  of  such  default." 
It  was  held  that  a  demand  of  the  principal  need  not  be  made  before 
suit  against  the  defendant. 

In  Clark  v.  Burdctt,  2  Hall,  217,  there  was  a  guaranty  by 
defendant  of  payment  of  bills  of  merchandise  purchased  or  to  be 
purchased,  and  it  was  held  that  a  demand  of  the  purchaser  and 
notice  to  defendant  were  not  necessary  as  conditions  precedent  to 
the  plaintiff's  right  of  action. 

In  Turnurc  v.  Hohcnthal,  36  X.  Y.  Super.  Ct.  79,  where  a 
surety  to  a  lease  bound  himself  that,  in  case  default  should  at  any 
time  be  made  by  his  principal  in  payment  of  rent  and  in  the  per- 
formance of  the  conditions  of  the  lease  to  be  by  him  performed,  he 
would  pay  the  rent  in  arrear.  and  all  damages  in  consequence  of  the 
non-perfonnance  of  the  covenants,  without  requiring  any  notice  of 
such  default,  it  was  held  that  no  demand  was  necessary  to  be  made 
of  the  tenant  by  the  landlord  for  the  rent  before  proceeding  against 
the  surety,  and  that  the  landlord  was  under  no  obligation  to  attempt 
to  collect  the  rent  or  enforce  the  covenants  against  the  tenant.  A 
like  view  was  taken  in  McKcnaie  v.  FarrcU,  4  Bosw.  204,  and  ift 
Duckcr  V.  Rap[^,  41  X.  Y.  Super.  Ct.  235. 

In  Cordicr  v.  Thompson,  8  Daly,  172,  one  Ferrero  executed 
an  instrument  by  which  she  agreed  to  return  to  plaintiff's  intestate 
a  certain  amount  of  money  at  a  certain  time,  and  the  obligation  of 
the  defendant  was  in  the  following  form:  "I  guaranty  the  above 
obligation."  This  was  held  to  be  a  guaranty  of  payment,  and  that 
neither  demand  on  the  principal  nor  notice  to  the  guarantor  of 
default  w^ere  prerequisite  to  an  action  on  the  guaranty. 

Volt::  V.  Harris,  40  111.  155,  was  an  action  upon  a  guaranty  of 
a  lease,  by  which  the  guarantor  became  "security"  that  the  lessee 
would  do  and  perform  all  the  covenants  contained  in  the  lease,  and 
promised  to  pay  to  the  lessors  all  rents  and  damages  the  lessors 
might  sustain  by  reason  of  the  non-compliance  with  or  non-fulfill- 
ment of  the  stipulations  of  the  lease  by  the  lessee.  It  was  held  that 
the  liability  of  the  guarantor  was  primary,  and  that  he  was  not 
entitled  to  notice  of  the  non-performance  of  the  stipulations. 

In  Ashton  v.  Bayard,  71  Pa.  St.  139,  the  obligation  against 
the  surety  was :  "I  hereby  become  the  surety  of  S.  Coulter  for  the 


24  GUARANTY    AXP    Sl'KKTVSII  II'. 

fulfillment  of  the  within  obligation."  This  referred  to  a  due-bill 
given  by  Coulter  for  certain  shares  of  stock.  This  was  held  to  be 
an  original  undertaking  l)y  the  surety,  and  a  recovery  thereon  could 
be  had  without  proving  diligence  to  pursue  Coulter.  See  also 
Brandt,  Sur.  Sec.  86,  172. 

In  the  present  case,  as  against  the  lessee,  no  demand  was 
necessary.  Jackson  v.  Biniis,  10  W'kly.  Dig.  105;  McMiirph\  v. 
Mi  not,  4  X.  H.  251. 

Mis  agreement  was  broken  when  he  failed  to  pay,  and  when 
he  violated  the  conditions  of  the  lease.  The  defendant  agreed  to 
fulfill  all  the  terms  and  conditions  not  fulfilled  by  the  tenant.  This 
was,  in  efifect.  an  agreement  to  pay  if  the  lessee  did  not.  When  the 
plaintifif  shows  a  breach  by  the  lessee,  and  non-payment,  or  non- 
fulfillment, then  he  shows  all  that  by  the  terms  of  the  contract  he 
is  required  to  show  in  order  to  make  the  defendant  liable.  The 
agreement  of  defendant  was  not  that  the  lessee  would  pay  on 
demand  or  upon  suit  brought,  Init  it  was  absolute  that  he  would 
fulfill  if  tlie  lessee  did  not.  This,  in  substance,  was  a  guaranty  of 
payment,  and  not  of  collection.  The  defendant,  in  his  agreement. 
re(|uired  no  demand  or  notice  or  exhaustion  of  remedies  against 
the  tenant.  No  duty  was  im])osed  on  the  lessor  in  the  first  instance 
to  take  any  steps  against  the  debtor,  and  that  is  said  to  be  the  te.st 
in  order  to  examine  whether  a  guaranty  of  payment  or  collection 
exists.     Toles  v.  A  dee,  supra. 

The  contracts  of  sureties  are  to  be  construed  like  other  con- 
tracts, so  as  to  give  efifect  to  the  intention  of  the  parties.  People  v. 
Backus,  1 17  N.  Y.  201,  22  N.  E.  759. 

It  is  hardly  to  be  assumed  here,  in  the  al)sence  of  an  express 
stipulation  to  that  efifect,  that  the  intention  of  the  parties  was  that 
the  lessor  should  ])ursue  the  lessee  to  the  end  of  an  execution  before 
calling  u])on  the  surety.  In  fact,  that  does  not  now  seem  to  be 
claimed  by  the  respondent's  counsel,  but  he  relies  on  the  question  of 
demand  and  notice.  This  the  defendant  did  not  require  by  his 
agreemem,  and  he  was  not  entitled  to  it.  any  more  than  in  case  of 
an  absolute  guaranty  of  jxiyment.  This  view  is,  I  think,  in  accord- 
ance with  the  current  of  authority,  as  illustrated  by  the  cases  alcove 
referred  to.  Judgment  and  order  reversed,  witli  costs  of  a])pcal, 
and  interlocutory  judgment  ordered  for  th'.  plaintifi'  upon  the 
demurrer,  with  costs,  with  leave  to  the  defendant  to  answer  in  20 
days  upon  the  payment  of  the  costs  of  the  demurrer  and  of  the 
appeal.     All  concur. 


l^ 


CAMPBELL   VS.    STIER^L\N.  wD 

Campbell  zvs-.  Shek.\l\n  (Hornet's  A])peal)    (1892). 

151  Pa.  St.  70;  s.  c.  sub  nam.  in  re  Sherman's  Estate  (Appeal  of 
Hornet),  25  Atl.  35. 

Appeal  from  eonrt  of  eommon  pleas.  Snilh-an  eounty  ;  John 
A.  Sittser,  Judge. 

Contest  between  J-  A.  Hornet,  claimant,  and  other  lien  cred- 
itors of  Adam  Slierman,  upon  distribution  of  a  fund  arising  from  a 
sherifif's  sale  of  the  real  estate  of  said  Sherman.  From  a  judgment 
allowing  Hornet's  claim  in  part  only,  he  appeals.     Reversed. 

/.  G.  Scoiilcii,  for  appellant. 
E.  M.  Diinhaiu,  for  appellee. 

McCoLLUM,  J.  On  the  first  of  January,  1887,  J.  A.  Homet, 
the  appellant,  bought  of  Adam  Sherman  two  judgments  against 
A.  R.  Robbins,  on  which  there  was  then  an  unpaid  balance  of 
$592.38.  and  the>-  were  duly  assigned  to  him.  At  the  same  time  he 
loaned  to  Sherman  $266.62.  To  secure  the  payment  of  the  judg- 
ments and  the  money  loaned  he  received  the  bond  of  Sherman  in 
the  sum  of  $859,  on,  which,  by  virtue  of  the  warrant  of  attorney 
contained  therein,  judgment  was  entered  Jan.  3,  1887.  On  a  dis- 
tribution of  the  proceeds  of  a  sale  by  the  sherifif  on  the  13th  of  Sep- 
tember, 1890,  of  the  real  estate  of  Sherman,  the  appellant  claimed 
to  apply  on  his  judgment  the  fund  remaining  after  paying  costs  and 
prior  liens.  The  subsequent  lien  creditors  of  Sherman  admitted  that 
the  appellant  was  entitled  to  receive  the  sum  loaned,  with  interest 
thereon,  but  contended  that  Sherman  was  released  from  liability  as 
to  the  balance  because  of  the  appellant's  failure  to  revive  the  Rob- 
bins  judgments.  To  this  the  appellant  answered  that  his  omission 
to  revive  these  judgments  did  not  release  Sherman,  and  that,  if  it 
did,  the  creditors  could  not  take  advantage  of  it  on  distribution.  The 
conclusion  reached  by  the  learned  auditor  was  that  he  could  not,  at 
the  instance  of  the  lien  creditors,  set  aside  or  disregard  the  judg- 
ment on  the  showing  before  him,  but  that  Sherman  might,  in  an 
appropriate  proceeding,  rely  on  the  appellant's  negligence  as  a  de- 
fense to  it.  The  learned  president  of  the  common  pleas  thought  that 
this  defense  could  be  successfully  made  before  the  auditor  by  the 
lien  creditors,  and  the  fund  was  accordingly  awarded  to  them. 


26  GUARANTY    AXP    SURKTVSH  IP. 

In  n^viewiniL;'  the  decision  cf  the  oiurt  helow,  tlie  lirst  inii)ort- 
ant  inquiry  is  whether  the  ()l)iigation  of  Sherman  in  respect  to  the 
Ro])l)insju(lg-nients\vas  that  of  a  surety  or  of  a  i^uarantor.  If  he  was 
a  surety,  he  was  not  released  from  hal)ihty  by  the  neghgence  of  the 
appellant,  and  the  contention  concerning  the  powers  of  the  auditor 
has  nothing  to  rest  upon.  It  is  well  settled  that  mere  forl)earance,. 
however  prejudicial  to  a  surety,  will  not  discharge  him,  and  that 
the  failure  of  a  creditor  to  revive  a  judgment  does  not  release  the 
surety,  unless  there  was  an  express  agreement  that  it  should  I'jc 
kept  revived  for  his  benefit.  IVintoii  v.  Little,  94  Pa.  St.  64;  U.  S. 
V.  Simpson^  3  Pen.  &  W.  437. 

We  think  the  undertaking  of  Sherman  was  that  of  a  surety. 
His  bond  inchuied  the  money  loaned  and  the  balance  due  on  the 
Robbins  judgments,  and  by  its  express  terms  was  to  remain  in 
force  until  the  whole  sum  was  paid.  The  written  conditions  in  the 
bond  define  the  liability  of  the  obligf)r,  and  we  cannot  add  to  them 
by  implication  a  condition  which  would  render  them  nugatorv.  The 
written  condition  applicable  to  this  contention  is  that,  if  the  judg- 
ments "shall  1)e  ]:)aid  in  full  by  the  said  A.  R.  Robbins,  his  heirs 
and  assigns,  to  the  said  J.  A.  Homet,  then  this  obligation  to  be  void, 
otherw'ise  to  be  and  remain  in  full  force  and  virtue." 

The  appellant  purchased  tlu'  judgments  on  the  agreement  of 
his  vendor  to  pay  them  if  Robbins  did  not.  It  was  a  contract  of 
suretyship,  and  not  of  technical  guaranty,  on  which  he  parted  with 
his  mone}'.  On  the  failure  of  Robbins  to  jjay  the  judgments  at 
maturity,  he  was  at  liberty  to  proceed  directly  against  the  surety. 
He  was  not  bound  to  resort  to  legal  proceedings  against  Robbins 
or  to  show  that  they  would  have  been  unavailing  in  order  to  sustain 
process  upon  the  bond.  He  was  under  no  legal  duty  to  the  surety 
to  revive  the  judgments,  unless  requested  to  do  so.  and,  as  no  such 
re(|uest  was  made,  negligence  in  this  particular  cannot  be  imputed 
to  him.  The  law  on  this  subject  is  stated  by  Agnew,  J.,  in  Rcigart 
V.  White,  52  Pa.  St.  440.  as  follows: 

"A  contract  of  suretyship  is  a  direct  liability  to  the  creditor 
for  the  act  to  be  performed  b}-  the  debtor,  and  a  guaranty  is  a 
liability  only  for  his  ability  to  perform  this  act.  In  the  former  the 
surety  assumes  to  perform  the  contract  of  the  principal  debtor  if  he 
should  not,  and  in  the  latter  the  guarantor  undertakes  that  his 
principal  can  perform — that  he  is  able  to  do  .so.  From  the  nature 
of  the  former,  the  undertaking  is  immediate  and  direct  that  the  act 
shall  be  done  which  if  not  done  makes  the  surety  resjionsilile  at 


DEOBOLD    VS.    OPPERMAN. 


27 


once ;  but,  from  the  nature  of  the  latter,  non-aljihty,  in  other  words 
insolvency,  must  be  shown." 

In  Krauiph's  Ex'x  v.  HatrSs  Ex'rs,  Id.  525,  Woodward,  C.  J., 
discussing  the  same  subject  said:  "The  contract  of  a  guarantor  iS' 
to  be  carefully  distinguished  from  that  of  a  surety,  for  whilst  both 
are  accessory  contracts,  and  that  of  a  surety  in  some  sense  condi- 
tional, as  that  of  a  guarantor  is  strictly  so,  yet  mere  delay  to  sue 
the  principal  debtor  does  not  discharge  a  surety.  The  surety  must 
demand  proceedings,  with  notice  that  he  will  not  continue  bound 
unless  they  are  instituted.    Cope  v.  Smith,  8  Serg.  &  R.  no. 

By  his  contract  he  undertakes  to  pay  if  the  debtor  do  not; 
the  guarantor  undertakes  to  pay  if  the  debtor  cannot.  The  one  is 
an  insurer  of  the  debt ;  the  other,  an  insurer  of  the  solvency  of  the 
debtor.  It  results  as  a  matter  of  course  out  of  the  latter  contract 
that  the  creditor  shall  use  diligence  to  make  the  debtor  pay,  and,, 
failing  this,  he  lets  go  the  guarantor."  The  foregoing  extracts 
from  the  opinions  of  eminent  Pennsylvania  jurists  draw  with  re- 
markable clearness  and  precision  the  distinction  between  a  contract 
of  suretyship  and  a  contract  of  guaranty,  and  accurately  define 
the  respective  rights  and  obligations  of  a  surety  and  a  guarantor. 
There  has  been  no  departure  by  this  court  from  the  principles 
announced  in  them,  and  they  sustain  the  contention  of  the  appellant 
that  his  omission  to  revive  the  Robbins  judgment  did  not  affect 
Sherman's  liability  on  his  bond.  It  follows  that  it  was  error  to 
award  the  fund  to  the  subsequent  lien  creditors. 

Decree  reversed,  and  record  remitted  to  the  court  below,  with 
direction  to  distribute  the  fund  in  accordance  with  this  opinion  ; 
the  costs  of  this  appeal  to  be  paid  by  the  appellees. 


^ 


Deobold  vs.  Opperman  ct  al  (1888). 
IH  N.  Y.  531,  19  N.  E.  04- 

Appeals  from  Supreme  Court,  general  term.  First  Department. 

Actions  by  Philip  Deobold,  executor  of  the  will  of  Maria 
Deobold,  deceased,  against  Frederick  Opperman,  Jr.,  and  anotlier, 
sureties  on  the  bond  of  Louisa  Deobold  (now  Rausch),  adminis- 
tratrix of  Henrv  Deobold,  deceased.    In  both  cases  judgments  were 


■28 


GUAKAXTV    AM)    STRiyrVSIIIP 


rendered  for  the  ])laintiff.  and  afiirnied  on  a])])cal  to  the  ijeneral 
term.     Defendants  agciin  api)eal. 

.Islibrl  P.  I' itch,  for  ai)])ellants. 
LiCovi^c  I'.  Langhciii,  for  respondent. 

i\L'c;i-:u,  C.j.  Tli's  aelion  was  l)rou^ht  hy  the  [jlaintiff  as 
•executor  of  the  estate  of  his  mother,  Maria  Deohold,  to  recover 
from  tlie  defendants  as  sureties  upon  the  hond  of  Louisa  Deolx)ld, 
i^iven  updu  her  ai)pointmenl  as  adnunistratrix  n\  the  estate  of  her 
husljanth  Henry  Deol)old.  a  sum  of  money  ordered  hy  tlie  stuTogate 
to  he  paid  to  Maria  Deohold  as  mother  and  next  of  kin  to  tlie  intes- 
tate, hut  w  hich  the  administratrix  refused  or  neglected  to  pay.  The 
trial  court  directed  a  verdict  for  the  ])laintiff,  and  the  judgnnent 
entered  thereon  was  affirmed  upon  a])peal.  The  supreme  court 
having  granted  leave  to  appeal  to  this  court,  tlie  matter  coiues  here 
for  review.  The  record  presents  the  following  facts,  the  evidence 
being  practically  undisputed:  I'rior  to  January  16,  1880,  Henry 
Deohold,  a  resident  of  the  city  of  New  York,  died  possessed  of  per- 
sonal ]M-operty  of  about  the  value  f)f  $3,300,  and  leaving  him  sur- 
vi\'ing  liis  widow,  Louisa  Deohold,  his  mother,  Maria  Deol)old, 
and  brother,  I'hilip  Deol)old,  next  of  kin.  (Jn  that  day  the  surro- 
gate of  Xew  York  issued  letters  of  administration  upon  the  estate 
to  the  widow,  Louisa  Deohold,  and  the  defendants  became  sureties 
U])on  her  bond  for  the  faithful  performance  of  her  duties  as  such. 
( )n  December  9,  1882,  upon  a  general  accounting  before  die  surro- 
gate by  the  administratrix,  he  made  a  decree  finally  adjusting  her 
accounts,  and  discharging  the  administratrix  and  her  sureties  from 
their  bond.  This  decree  ])urported  to  have  Ijeen  based  u])on  a  writ- 
ten waiver  of  notice  of  the  settlement  of  the  estate,  signed  by  Maria 
and  I'hili])  Deohold,  and  a  written  assignment  bv  them  to  the  ad- 
ministratrix of  all  their  right,  title  and  interest  in  the  estate  of  the 
deceased.  Proceedings  were  thereafter  l)egun  by  Maria  and  Philip 
in  the  surrogate's  court,  on  Jan.  (),  1883  to  set  aside  the  decree  ren- 
dered on  final  accounting,  upon  the  ground  that  it  was  fraudulently 
obtained,  and  that  the  assignment  and  waiver  of  citation  were  pro- 
cured from  them  b\  the  administratrix  through  fraud  and  mis- 
representation. Such,  proceedings  were  thereupon  had  that  the 
surrogate,  on  Feb.  20.  1883,  made  an  order  vacating,  and  in  all 
respects  setting  aside  the  decree,  and  the  defendants  were  immedi- 
ately thereafter  served  with  a  copy  of  such  order.     Subsequently, 


DEonor.D  vs.  oi-i-krman.  29" 

upon  a  further  accounting,  the  surrogate  made  an  order  directing 
the  administratrix  to  pay  to  Maria  Deoljold  the  sum  of  $200,  arid 
she  refusing  to  pay  the  same,  the  surrogate  made  a  further  order 
directing  tlie  prosecution  of  the  defendant's  hond  for  the  recovery 
of  the  amount  so  ordered  to  he  paid.  This  suit  was  hrought  in 
pursuance  of  the  latter  order. 

It  further  appeared  that,  hefore  consenting  to  act  as  sureties 
upon  the  bond  of  Louisa  Deobold,  the  defendants  required  her  to 
deposit  with  them  the  entire  proceeds  of  the  estate,  to  be  retained 
until  they  were  discharged  from  liability  upon  the  bond,  and  an 
agreement  to  that  effect  was  made  between  her  and  the  defendant's. 
No  security  was  given  to  the  administratrix  for  the  repayment  'of 
those  moneys  by  the  defendants,  and  by  the  understanding  of  the 
parties  they  were  to  pay  interest  thereon,  and  were  authorized  to 
use  them  in  their  business  as  brewers.  L'ncler  this  arrangement 
the  administratrix,  at  the  time  of  the  execution  of  the  bond,  depos- 
ited with  the  defendants  the  sum  of  $3,300,  the  funds  of  the  estate,, 
which  they  employed  in  tlieir  Imsiness  until  Jan.  16,  1883.  when  it 
was  repaid  by  them,  together  with  a  loan  of  v$2,900  and  interest,  to 
Louisa  Deobold.  This  pavnient  was  made  by  the  defendants  after 
an  examination  of  the  decree  of  the  surrogate  of  Dec.  9,  1882,  dis- 
charging them  from  liability  on  the  bond,  and  after  an  inspection 
of  the  papers  upon  which  such  decree  was  founded.  It  did  not 
appear  that  the  defendants  had  actual  notice  of  the  proceedings 
previously  instituted  by  Philip  and  ]\Iaria  Deobold  to  set  aside  such 
decree  for  fraud,  or  that  they  were  made  parties  thereto.  It  further 
appeared  that,  in  actions  instituted  on  behalf  of  Philip  and  Maria 
Deobold  against  the  administratrix  in  the  court  of  common  pleas 
of  New  York,  judgments  had  been  obtained  by  the  plaintiffs, 
respectively,  vacating  and  setting  aside  the  assignments  before 
referred  to  as  fraudulent  and  void. 

Tw^o  questions  are  presented  by  the  appellants  as  grounds  for 
the  reversal  of  the  judgment  below,  which  may  be  briefly  stated  as 
follows :  (  I  )  That  the  surrogate  could  not  reinstate  the  defendants 
in  their  lial)ility  as  sureties  u]X)n  their  bond  in  proceedings  to  which 
they  were  not  parties;  and  (2)  that  the  agreement  by  which  they 
were  made  the  custodians  of  the  funds  of  the  estate  was  binding 
and  lawful,  and  authorized  them  to  retain  them  until  after  the  dis- 
charge of  such  bond.  As  the  corollary  of  the  latter  proposition,  it 
is  urged  that,  having  the  right  to  retain  them,  and  having  paid 
them  out  relying  upon  the  assignment,  and  decree  of  the  surrogate- 


50  GUARAXTY  AXD  SURETYSHIP. 

based  thereon,  the  defendants  were  rcHeved  from  the  obhgation 
of  repaying  the  same  moneys  in  this  action. 

We  are  of  the  opinion  that  the  claims  of  the  defendants  are  not 
maintainable.  No  question  is  made  but  that  the  surrogate  had 
ample  power  to  set  aside  his  decree  for  fraud,  and  require  a  further 
.accounting  by  the  administratrix  as  to  the  estate  (Sec.  i,  c.  359, 
Laws  1870)  ;  but  the  claim  is  that  the  sureties  were  not  bound  by 
the  subsequent  adjudications  of  the  surrogate,  for  the  reason  that 
they  (lid  not  have  notice  of  the  proceeding.  The  claim  is  clearly 
untenable.  The  decree  discharging  the  administratrix  and  her 
sureties  a\  as,  when  made,  assailable  by  any  party  thereby  aggrieved, 
either  by  motion  to  set  it  aside  or  by  proceedings  on  appeal.  In 
neither  case  was  it  necessary  that  the  sureties  should  have  notice 
of  the  proceeding.  1'he  sureties  are  the  privies  of  the  adminis- 
tratrix, and  are  precluded  from  questioning  any  lawful  order  made 
by  the  surrogate  in  a  proceeding  wherein  she  is  a  party,  if  obtained 
without  collusion  between  such  administratrix  and  the  next  of  kin 
or  creditors  of  the  estate.  Scoficld  v.  Clntrchill,  72  N.  Y.  565; 
Gcrould  V.  ll'lLwii,  81  N.  Y.  583. 

Their  bond  contemplates  that  they  shall  remain  sureties  as 
long  as  the  surrogate  retains  jurisdiction  of  the  i)roceedings  in 
administration  of  the  estate,  and  has  power  to  make  valid  orders 
therein  affecting  the  property  administered  upon. 

(  )f  course  the  sureties  would  not  be  bound  by  an  order  which 
the  surrogate  had  no  jurisdiction  to  make ;  but  so  long  as  his 
jurisdiction  continues  the  liability  of  the  sureties  remains.  The 
very  language  of  the  liond  provides  for  orders  made  in  proceedings 
inter  alios  and  for  the  liability  of  the  sureties  for  a  non-perform- 
ance by  the  administratrix  of  any  decree  or  order  made  by  the 
surrogate's  court.  The  condition  of  the  bond  is  that  liability  shall 
follow  her  infidelity  to  her  trust,  or  disobedience  of  any  lawful 
order  or  decree,  wdienever  made  in  the  proceedings.  It  was,  we 
think,  never  heard  of  in  practice  that  sureties  on  an  administrator's 
bond  should  have  notice  of  ])roceedings  in  the  administration 
of  an  intestate's  estate.  It  could  not  be  claimed  that  these  sure- 
ties were  entitled  to  notice  of  an  appeal  from  the  surrogate's 
decree,  or  that  if  an  appeal  was  taken  from  a  decree  in  favor  of 
an  administrator,  and  the  decree  should  be  reversed,  they  would 
not  still  remain  liable  upon  their  bond.  Such  bonds  are  similar 
to  those  given  in  civil  actions  upon  appeals  and  otherwise,  and 
have  alwavs  been  held  to  abide  the  result  of  the  action.   *  *  "''■  =" 


DEOBOLD    \S.    OPTHRMAN.  31 

The  bond  in  question  was  executed  for  the  sole  purpose  of  secur- 
ing the  persons  interested  in  the  property  the  administratrix  was 
about  to  receive,  from  any  loss  which  they  might  sustain  through 
her  misconduct  or  dishonesty,  and  the  defendants  were  well  aware 
of  the  character  of  the  transaction.  The  defendants  thereby  con- 
tracted to  become  sureties  for  the  faithful  performance  by  her  of 
her  duties  as  such  administratrix,  and  the  beneficiaries  of  the  estate 
thereupon  became,  under  the  theory  of  the  law,  entitled,  not  only 
to  the  security  afforded  by  the  bond,  but  also  to  that  of  the  funds 
of  the  estate  remaining  in  the  hands  of  the  administratrix.  Tf 
this  transaction  is  sanctioned,  one  of  the  securities  that  the  law 
provides  to  such  persons  is  entirely  destroyed,  and  the  funds  of 
the  estate  are  merged  in  the  personal  responsibility  of  the  sureties 
alone,  subject  to  the  hazard  and  casualties  which  frequently  attend 
persons  engaged  in  trade.  '■■'  "^^  *  * 

But  it  is  claimed  that  the  surrender,  after  the  decree  can 
celing  the  administratrix's  bond,  of  the  funds  of  the  estate  held 
by  the  defendants  to  the  administratrix,  operates  as  a  defense 
to  this  action.  The  principle  upon  which  the  appellants  make 
this  point  is  not  very  clearly  presented  in  their  points,  and  we  are 
unable  to  see  the  exact  theory  upon  which  it  is  based.  They  do 
not  claim  that  the  plaintiff'  is  estopped  from  alleging  the  invalid- 
ity of  the  assignment,  or  of  the  decree  upon  the  faith  of  which 
the  payment  was  made.  They  claim,  however,  that  "of  two  inno- 
cent parties  that  one  must  suft'er  who  puts  it  in  the  power  of  the 
third  person  to  do  the  act  which  caused  the  injury."  This  con- 
tention is  probably  based  upon  the  familiar  maxim  that,  "When 
one  of  two  innocent  parties  must  sustain  a  loss  from  the  fraud  of 
a  third,  such  loss  shall  fall  upon  the  one,  if  either,  whose  act  has 
enabled  such  fraud  to  be  committed."  8  Abb.  N.  Y.  Dig.  "Max- 
ims," 84,  and  volume  4,  "Maxims,"  382. 

This  maxim  has  been  applied  and  illustrated  in  numerous 
cases  in  this  state,  among  which  are  the  following:  Spraights  v. 
Hazdcy,  39  N.  Y.  441  ;  Moore  v.  Bank,  55  N.  Y.  41 ;  Griszvold  v. 
Haven,  25  N.  Y.  595 ;  Bank  v.  Monfcath,  26  N.  Y.  505  ;  Sandford 
V.  Handy,  23  Wend.  268;  Root  v.  French,  13  Wend.  572;  Voorhis 
V.  Olnistead,  66  N.  Y.  116. 

These  cases  generally  relate  to  the  authority  of  agents  whose 
right  to  deal  with  the  property  of  their  principals  was  in  dispute, 
and  the  maxim  has  been  applied  by  reason  of  various  peculiar 
circumstances  Avhich  were  deemed  sufficient  to  preclude  the  prin- 


32  GUARANTY  AND  SURETYSHIP. 

cipal  from  availing  himself  from  the  agent's  want  of  actual  author- 
ity; but  the  general  principle  involved  has  been  applied  in  many 
cases  where  a  loss  has  followed  from  the  negligence  of  one  party 
which  enabled  a  fraud  to  be  committed  upon  another.  We  are  of 
the  opinion  that  the  maxim  has  no  application  to  the  case  in  hand, 
for  the  reason  that  no  actionable  fraud  has  been  shown  to  nave 
been  committed  upon  the  defendants  in  this  transaction,  nor  lias 
any  loss  accrued  to  them  in  conseciuence  of  the  surrender  of  the 
money  referred  to.  It  is  i)robably  true  that  the  defendants  would 
not  have  surrendered  to  the  administratrix  the  funds  of  the  estate 
in  their  possession,  or  have  repaid  to  her  the  debt  whicli  they 
owed  her,  except  for  the  decree  produced  for  their  inspection ; 
but  it  is  also  very  clear  that  they  had  no  right  to  retain  such  funds 
by  virtue  of  their  contract  with  the  administratrix,  and  there  was 
no  intention  to  commit  a  fraud  upon  them  by  the  administratrix 
in  obtaining  possession  of  the  property  to  which  she  was  legally 
entitled.  She  was  entitled  to  the  repayment  of  her  loan  as  a 
matter  of  course,  lor  she  held  a  promissory  note,  therefor  payable 
on  demand,  and  no  possible  defense  could  be  made  against  its 
collection.  Xeither  as  we  have  seen,  could  they  have  resisted  a 
claim  made  ])y  her  or  others  for  the  reclamation  of  the  money  of 
the  estate.  They  have  done  nothing  -therefore  in  consecjuence 
of  the  decree,  except  what  they  were  under  legal  obligation  to 
do,  and  have  therefore  suffered  no  legal  loss  or  injury  from  the 
transaction. 

The  surrender  of  the  ])roperty  in  question  would  not  even 
have  furnished  a  good  consideration  for  a  promise  made  by  the 
administratrix.     Vandcrvilt  v.  Schrcycr,  91  N.  Y.  392. 

]t  is  of  the  very  essence  of  an  action  of  fraud  or  deceit  that 
the  same  should  be  accompanied  by  damage,  and  neither  dainnuui 
absque  injuria  nor  injuria  ahsqu.c  damnum  by  itself  establishes  a 
good  cause  of  action.  Ilutcliins  v.  IJufcliins,  7  Hill,  104:  Michi- 
gan V.  Bank.  33  X.  Y.  9. 

Neither  can  a  partv  claim  to  have  been  defrauded  who  has 
been  induced  by  artifice  to  do  that  which  the  law  would  have  other- 
wise compelled  him  to  perform.  TJiompson  v.  Mcnck,  41  N.  Y. 
82;  Sturx  V.  Conger,  36  X.  Y.  673;  Randall  v.  Ilazclton,  12  Allen, 
412. 

The  defendants  may  ix)ssibly  lose  the  money  which  they  pay 
in  satisfaction  of  their  bond,  but  this  will  result  from  their  con- 
tract, and  the  confidence  reposed  by  them  in  their  principal,  and 


DEOBOLD    VS.    orPHRMAN.  33 

not  at  all  from  the  surrender  of  the  property  held  by  them.  It  is 
not  probable,  however,  that  they  will  lose  anything,  as,  for  all  that 
appears,  their  principal  is  perfectly  responsible,  and  liable  to 
indemnifv  them  for  any  sums  they  may  be  obliged  to  pay  on  her 
account.  It  affirmatively  appears  that  in  January,  1883,  she  not 
onlv  had  in  her  possession  all  the  funds  of  the  estate,  but  also  the 
additional  sum  of  upwards  of  $3,000,  the  result  of  her  own  savings 
during  the  preceding  two  or  three  years,  and  being  an  auKjunt 
largely  exceeding  the  liability  of  the  defendants  on  their  bond. 

The  main  question  in  the  case  really  seems  to  be,  who  shall 
pursue  the  administratrix  for  the  moneys  of  the  estate  improperly 
retained  by  her?     We  think  it  is  the  duty  of  the  defendants,  as 
the  object  of  their  Ijond  was  to  relieve  the  next  of  kin  from  the 
necessity  of  resorting  to  the  personal  liability  of  a  dishonest,  neg- 
ligent, or  absconding  administrator.    We  are  further  of  the  opinion 
that  the  defendants  are  precluded  from  the  benefit  of  the  prin- 
cipal contained  in  the  maxim  by  reason  of  the  obligations  of  their 
bond.     They  are  the  privies  of  their  principal,  and  the  guarantors 
of  her  fidelity  in  the  administration  of  her  trust.     The  decree  under 
which  the  defendants  claim  discharge  from  liability  was  procured 
by  a  fraud  practiced  upon  the  surrogate  through  the  presenta- 
tion of  papers  fraudulently  obtained  and   used  l^y   her.     It  was 
against  the  perpetration  of  such  frauds  that  the  defendant's  bond 
was  intended  to  protect  the  beneficiaries  of  the  estate.     The  de- 
fendants had  covenanted  that  the  administratrix  should  faithfully 
execute  the  trust  reposed  in  her,  and  obey  all  lawful  decrees  and 
orders   of  the   surrogate's   court.     When    she    obtained,   through 
fraud,  the  order  of  the   surrogate  awarding  the  moneys  of   tne 
estate  to  her,  and  canceling  her  bond,  she  violated  the  obligations 
of  her  trust,  and  the  defendants  became  liable  for  the  damages 
flowing   from   such  l:)reach  of  duty.     That   the  defendants  were 
deceived  by  the  administratrix  constituted  no  protection  to  them 
for  they  had  guarantied   that  she  should   deceive  nobody   in   the 
administration  of  her  trust.     The  liability  of  the  sureties  is  co- 
extensive with  that  of  the  administratrix,  and  embraces  the  per- 
formance of  every  duty  she  is  called  upon  to  perform  in  the  course 
of  administration.     It  is  quite  absurd  to  say  that  the  very  fact 
w-hich  creates  a  cause  of  action  against  the  sureties  should  also 
operate  as   a  defense  to  them.     They  cannot  stand   as   innocent 
parties  in  relation  to  an  act  which  they  have  covenanted  to  the 
plaintitt,   and  all   others  interested,   should   never  be   performed,. 


34  GUAKAXTV    AXD    SURKTVSIII  P. 

and  they  have  sustained  no  legal  loss  when  subjected  to  a  liability 
which  they  agreed  to  assume  in  the  event  which  is  now  alleged 
as  the  cause  of  their  misfortune.  We  are  therefore  of  the  opinion 
that  the  judgments  below  should  be  affirmed,  with  costs. 

The  decision  in  action  Xo.  2,  between  the  same  parties,  is 
necessarily  controlled  by  the  determination  in  action  No.  i,  and 
the  judgment  in  that  case  must  therefore  also  be  affirmed,  with 
costs. 

All  concur,  except  Earl  and  Peckiiaai,  JJ.,  dissenting. 


Note. — That  part   of   the   Court's   opinion   holding    invalid   the   agreement  by   which 
the  defendants  were  made  custodians  of  the   funds  of  the  estate  is  omitted. 


S-Mirri  rs.  Siif.i.di^x  f.t  al.  (1876). 
35  Mich.  42;  24  Am.  Rep.  529. 

C.  &  IV.  A'.  Draper  &  C.  I.  Walker,  for  plaintiff  in  error. 

Meddangh  &  Driggs,  for  defendants  in  error. 

CooLEV,  Ch.  J.  The  legal  questions  in  this  case  arise  upon  the 
following  facts : 

Prior  to  June,  1867,  Eldad  Smith,  Isaac  Place,  and  Francis 
B.  Owen  were  partners  in  trade  imder  the  firm  name  of  Place, 
Smith  &  Owen,  and  as  such  became  indebted  to  defendants  in 
error  in  the  sum  of  $969  on  book  account. 

In  the  month  mentioned  the  firm  was  dissolved  by  mutual 
consent,  Place  purchasing  the  assets  of  his  copartners  and  agree- 
ing to  pay  ofif  the  partnership  liabilities,  including  that  to  the 
defendants  in  error.  On  the  second  day  of  the  following  month 
Place  informed  the  defendants  in  error  of  this  arrangement,  and 
that  he  liad  taken  the  assets  and  assumed  the  liabilities  of  the  firm, 
and  they,  without  the  consent  or  knowledge  of  Smith  and  Owen,, 
took  from  Place  a  note  for  the  amount  of  the  fimi  indebtedness 
to  them,  payable  at  one  day  with  ten  per  centum  interest.  They 
did  not  agree  to  receive  this  note  in  payment  of  the  partnership 
indebtedness,  but  they  kept  it  and  continued  their  dealings  with 
Place,  who  made  payments  upon  it.  The  payments,  however,  did 
not  keep  down  the  interest.     Place,  in  1872,  became  insolvent  and 


SMITH    VS.    SHELDEN.  35 

made  an  assignment,  and  Smith  was  then  caUed  upon  to  make 
payment  of  the  note.  Tiiis  was  the  first  notice  he  had  that  he  was 
looked  to  for  payment.  On  his  decHning  to  make  payment,  suit 
was  brought  on  the  original  indebtedness  and  judgment  recov- 
ered. 

The  position  taken  by  the  plaintiffs  below  was,  that  as  they 
had  never  received  payment  of  their  bill  for  merchandise  they 
were  entitled  to  recover  it  of  those  who  made  the  debt,  the  giving 
of  the  note  which  still  remained  unpaid  being  immaterial. 

On  behalf  of  Smith  it  was  contended  that,  by  the  arrange- 
ment between  Place  and  his  copartners,  the  latter,  as  between  the 
three,  became  the  principal  debtor,  and  that  from  the  time  when 
the  creditors  were  informed  of  this  arrangement  they  were  bound 
to  regard  Place  as  principal  debtor  and  Smith  and  Owen  as  sure- 
ties, and  that  any  dealing  of  the  creditors  with  the  principal  to  the 
injury  of  the  sureties  would  have  the  eft'ect  to  release  them  from 
liability.  And  it  is  further  contended  that  the  taking  of  the  note 
from  Place,  and  thereby  giving  him  time,  however  short,  was  in 
law  presumptively  injurious. 

Upon  this  state  of  facts  the  following  questions  have  been 
argued  in  this  court : 

1.  Was  the  note  given  by  Place  in  the  copartnership  name 
for  the  copartnership  indebtedness,  but  given  after  the  dissolution, 
binding  upon  Smith  and  Owen? 

2.  If  Smith  and  Owen  were  not  bound  by  the  note,  were 
they  entitled  to  the  rights  of  the  sureties?     And 

3.  Did  the  taking  of  the  note  given  by  Place  disch-arge  Smith 
and  Owen  from  their  former  liability? 

On  the  first  point  it  is  argued  in  support  of  the  judgment 
that  when  a  copartnership  is  dissolved  the  partner  who  is  entrusted 
with  the  settlement  of  the  concern  sllbuld  be  held  to  have  implied 
authority  to  give  notes  in  settlement.  On  the  other  hand  it  is 
insisted  that  in  law  he  has  no  such  authority,  and  that  if  he 
assumes,  as  was  done  in  this  case,  to  give  a  note  in  the  partnership 
name,  it  will  in  law  be  his  individual  note  only. 

Whatever  might  be  the  case  if  the  obligation  which  was  given 
had  been  a  mere  acknowledgment  of  the  amount  due,  in  the  form 
of  a  due  bill  or  I  O  U,  we  are  satisfied  that  there  is  no  good  rea- 
son for  recognizing  iiijthe  partner  who  is  to  adjust  the  business 
of  the  concern  any  implied  authority  to  execute  such  a  note  as  was 
given  in  this  case.     This  note  was  something  more  than  a  mere 


36  GIWRAXTV    AXD    SURETYSHIP. 

acknowledgmtMiT  of  indebtedness;  and  it  bore  interest  at  a  large 
rate.  It  was  in  every  respect  a  new  contract.  The  HabiHty  of  the 
parties  upon  their  indebtedness  would  be  increased  by  it  if  valid, 
and  their  rig-hts  might  be  seriously  compromised  by  the  execution 
of  paper  payable  at  a  considerable  time  in  the  future  if  the  partner 
entrusted  with  the  adjustment  of  their  concerns  Avere  authorized 
to  make  new  contracts.  It  was  assumed  in  F.  &  M.  Bank  v.  Kcr- 
chcral.  2  Mich.  506-519,  that  the  law  was  well  settled  that  no  such 
implied  authority  existed,  and  we  are  not  aware  that  this  has  be- 
fore been  questioned  in  this  state.  See  Pcnnoycr  v.  David,  8  Mich. 
407.  We  think  it  much  safer  to  require  express  authority  when 
such  obligations  are  contemplated,  than  to  leave  one  party  at  lib- 
erty to  execute  at  discretion  new  contracts  of  this  nature,  which 
may  postpone  for  an  indefinite  period  the  settlement  of  their  con- 
cerns, when  a  settlement  is  the  very  purpose  for  which  he  is  to  act 
at  all. 

For  a  determination  of  the  question  whether  Smith  and  Owen 
were  entitled  to  the  rights  of  sureties,  it  seems  only  necessary  to 
ix)int  out  the  relative  position  of  the  several  parties  as  regards 
the  partnership  debt.  Place,  by  the  arrangement,  had  agreed  to 
pav  this  debt,  and  as  l^etween  himself  and  Smith  and  (  )wcn,  he 
was  legallv  bound  to  do  so.  But  Smith  and  Owen  were  also  liable 
to  the  creditors  equally  with  Place,  and  the  latter  might  look  to  all 
three  together.  Had  they  done  so  and  made  collections  from 
Smith  and  Owen,  these  parties  would  have  been  entitled  to  de- 
mand indemnity  from  Place.  This  we  believe  to  be  a  correct  state- 
ment of  the  relative  rights  and  ()l)ligations  of  all. 

Xow  a  surety,  as  we  understand  it,  is  a  person  whti,  being 
liable  to  pav  a  d.cbt  or  perform  an  obligation,  is  entitled,  if  it  is 
enforced  against  him,  to  be  indenmified  by  some  other  i)erson, 
who  ought  himself  to  have  made  payment  or  performed  before  the 
surety  was  compelled  to  do  so.  It  is  immaterial  in  what  form 
the  relation  of  principal  anrl  surety  is  established,  cjr  whether  the 
creditor  is  or  is  not  contracted  with  in  the  two  capacities,  as  \s 
often  the  case  when  notes  are  given  or  bonds  taken ;  the  relation 
is  fixed  by  the  arrangement  and  equities  between  the  debtors  or 
obligors,  and  may  be  known  to  the  creditor,  or  wholly  unknown. 
If  it  is  unknown  to  him,  his  rights  are  in  no  manner  affected  by 
it;  Init  if  he  knows  that  one  party  is  surety  merely,  it  is  only  just 
to  require  of  him  that  in  any  subsecjuent  action  he  may  take 
regarding  the  debt,  he  shall  not  lose  sight  of  the  surety's  equities. 


SMITH    VS.    SHELDEN.  37 

That  Smith  and  Owen  were  sureties  for  Place,  and  the  latter 
was  principal  debtor  after  the  dissolution  of  the  copartnership, 
seems  to  us  unquestionable.  Jt  was  then  the  duty  of  Place  to  pay 
this  debt  and  save  them  from  being  called  upon  for  the  amount. 
But  if  the  creditors,  having  a  right  to  proceed  against  them  all, 
should  take  steps  for  that  purpose,  the  duty  of  Place  to  indemnify, 
and  the  right  of  Smith  and  Owen  to  demand  indemnity,  were 
clear.  Every  element  of  suretyship  is  here  present,  as  nmch  as  if, 
in  contracting  an  original  indebtedness,  the  contract  itself  had 
been  made  to  show  on  its  face  that  one  of  the  obligors  was  surety 
merely.  As  already  stated,  it  is  mimaterial  how  the  fact  is  estab- 
lished, or  whether  the  creditor  is  or  is  not  a  party  to  the  arrange- 
ment which  establishes  it. 

This  view  of  the  position  of  the  parties  indicates  clearly  the 
right  of  Smith  and  Owen  to  the  ordinary  rights  and  equities  of 
sureties;  The  cases  which  have  held  that  retiring  partners  thus 
situated  are  to  be  treated  as  sureties  merely,  have  attempted  no 
change  in  the  law.  but  are  entirely  in  harmony  wuth  older  author- 
ities which  have  only  applied  the  like  principle  to  different  states 
of  facts,  where  the  relative  position  of  the  parties  as  regards  the 
debt  was  precisely  the  same.  We  do  not  regard  them  as  working 
any  innovation  whatever.  The  cases  we  particularly  refer  to  are 
Oakclcy  v.  Pasluilcr.  4  CI.  &  Fin.,  207;  IVilson  v.  Loyd,  Law  R., 
16  Eq.  Cas.,  60;  and  Millcrd  v.  Thorn,  56  N.  Y..  402. 

And  it  follows  as  a  necessary  result  from  what  has  been 
stated,  that  Smith  and  Owen  were  discharged  by  the  arrangement 
made  by  the  creditors  with  Place.  They  took  his  note  on  time,  with 
knowledge  that  Place  had  become  the  principal  debtor,  and  without 
the  consent  or  knowledge  of  the  sureties.  They  thereby  endan- 
gered the  security  of  the  sureties,  and  as  the  event  has  proved, 
indulged  Place  until  the  security  became  of  no  value.  True,  they 
gave  but  very  short  time  in  the  first  instance;  but,  as  remarked  by 
the  vice  chancellor  in  Wilson  v.  Loyd,  L.  R.,  16  Eq.  Cas.  60,  71, 
"the  length  of  time  makes  no  kind  of  difference."  The  time  was 
the  same  in  Fclloivs  v.  Prentiss,  3  Denio,  512,  wdiere  the  surety 
was  also  held  discharged.  And  see  Okie  v.  Spencer,  2  Whart., 
253.  But  that  indulgence  beyond  the  time  fixed  was  contemplated 
when  the  note  w-as  given  is  manifest  from  the  fact  that  it  was 
made  payable  with  interest.  In  a  legal  point  of  view  this  would 
be  immaterial,  but  it  has  a  bearing  on  the  equities,  and  it  shows 
that  the  creditors  received  or  bargained  for  a  consideration  for  the 


38  GUARANTY    AND    SURETYSHIP. 

very  indulgence  which  was  granted,  and  which  ended  in  the  in- 
solvency of  Place.  When  they  thus  hargain  for  an  advantage 
which  the  sureties  are  not  to  share  with  thcni,  it  is  neither  right 
nor  lawful  for  them  to  turn  over  to  the  sureties  all  the  risks.  This 
is  the  legal  view  of  such  a  transaction,  and  in  most  cases  it  works 
substantial    justice. 

The  judgment  must  be  reversed,  with  costs,  and  a  new  trial 
ordered.    The  other  Justices  concurred. 


KiNGSLAND,    Ct    qL,    rs.    KOEPPE,    Ct    qL     (1891). 

137  111.  344;28N.  E.  48. 

Tcnncy,  Hcnvley  &  C  off  ecu,  for  appellants. 
S.  P.  Doiithart,  for  appellees. 

CraK:,  |.  This  was  an  action  brought  by  Kingsland  Bros. 
&  Co.,  the  appellants,  against  Koeppe,  Schwuchon,  Klinge,  and 
Loring,  to  recover  a  balance  due  on  certain  promissory  notes  exe- 
cuted by  the  Lake  View  Electric  Light  Company,  and  payable 
to  the  plaintiffs.  At  the  date  of  the  execution  of  the  notes  by 
the  corporation,  the  four  defendants  wrote  their  names  across  the 
backs  of  the  notes,  and  they  were  sued  in  this  action  as  guarantors. 
On  the  trial  in  the  circuit  court,  one  of  the  defendants,  Loring, 
withdrew  his  pleas,  and  judgment  was  rendered  against  him  by 
default  for  the  full  amount  claimed  by  the  plaintiffs.  Nothing 
need  therefore  be  said^as  to  him  at  present.  The  other  defendants 
claimed  that  they  were  not  guarantors  of  the  notes,  and  oft'ercd 
parol  evidence  to  show  what  the  contract  was  between  them  and 
appellants  at  the  time  they  jilaced  their  names  on  the  backs  of 
the  notes.  The  court  admitted  the  evidence  and,  in  the  proposi- 
tions of  law  submitted,  held  that  it  was  competent  to  prove  by 
]iar(jl  evidence  what  the  real  contract  between  the  parties  was ;  and 
this  ruling  was  approved  in  the  appellate  court.     35  Til.  App.  8t. 

\\'here  the  payee  of  a  note  indorses  it  by  placing  his  name  on 
the  back  of  the  instrument,  a  contract  of  indorsement  is  created  ; 
the  liability  assumed  by  the  payee  being  established  by  the  writing. 


KINGSLAND    VS.    KOEPPE.  39 

Parol  evidence  to  change  or  vary  the  terms  or  conditions  of  a  con- 
tract is  not  admissible.  Mason  v.  Burton,  54  111.  353 ;  Johnson  v. 
Glover,  121  111.  283;  12  N.  E.  257;  Jones  v.  Albee,  70  111.  34; 
IVoodward  v.  Foster,  18  Grat.  200. 

But  where  a  person  who  is  not  the  payee  of  a  promissory  note, 
but  a  third  party,  places  his  name  on  the  back  thereof,  a  different 
question  arises.  In  such  case  the  rule  long  established  in  this  state 
is  that  it  may  be  shown  by  parol  evidence  what  liability  was  in- 
tended to  be  assumed.  In  an  early  case  (Cnshman  v.  Dement,  3 
Scam.  497)  where  a  third  party  wTOte  his  name  across  the  back  of 
a  note,  it  was  held  that  the  indorsement  was  prima  facie  evidence 
of  a  liability  in  the  capacity  of  a  guarantor,  but  the  legal  presump- 
tion was  liable  to  be  rebutted  by  parol  proof.  In  Boynton  v.  Pierce, 
79  111.  145,  where  the  obligation  of  a  guarantor  arose,  it  was  ex- 
pressly held  that  the  presumption  that  a  party,  not  the  payee,  who 
places  his  name  on  the  back  of  a  note  is  a  guarantor,  may  be  re- 
butted by  parol  evidence.  In  Stoivell  v.  Raymond,  83  111.  120, 
where  the  question  again  arose,  the  same  rule  was  declared.  The 
question  again  arose  in  Eberhart  v.  Page,  89  111.  550,  and  in  decid- 
ing the  case  it  is  said :  The  indorsement  of  a  note  in  blank  by  a 
third  party  raises  a  presumption  only  that  it  is  intended  thereby  to 
assume  the  liability  of  guarantor,  which  may  be  rebutted  by  proof 
that  the  real  agreement  between  the  parties  was  different.  From 
the  cases  cited  it  is  apparent  that  this  court  is  fully  committed  to 
the  doctrine  that,  when  a  third  party  writes  his  name  across  the 
back  of  a  promissory  note,  the  presumption  from  the  indorsement 
is  that  he  assumed  the  liability  of  guarantor;  yet  parol  evidence 
may  be  introduced  to  prove  what  liability  was  in  fact  assumed. 
It  is  conceded  in  the  argument  of  appellants  that  the  cases  cited 
fully  establish  the  rule  indicated ;  but  it  is  insisted  that  these  cases 
were  virtuallv  overruled  by  Johnson  v.  Glover,  121  111.  283,  12  N. 
E.  257.  This  is  a  misapprehension  of  the  force  and  effect  of  tliat 
decision.  In  that  case,  Johnson,  who  was  the  payee  of  a  note,  in- 
dorsed it  in  blank,  and  the  note  subsequently  fell  into  the  hands  of 
Glover,  who  sued  Johnson  as  a  guarantor;  and  it  was  held  that  he 
was  not  a  guarantor,  but  an  indorser,  and  that  parol  evidence  was 
not  admissible  to  vary  or  change  the  character  of  the  liability  he 
had  assumed.  It  is  there  said :  The  general  rule  is  that  the  name 
of  the  payee  appearing  on  the  back  of  the  instrument  is  evidence 
that  he  is  indorser,  and  proves  that  he  has  assumed  the  liability  of 
an  indorser  as  fully  as  if  the  agreement  was  written  out  in  words 


40  .  GUARAXTY    AND    SURKTVSIII  P. 

( citino;  authorities).     Parol  evidence  is  no  more  admissible  to  con- 
tradict or  varv  this  contract  than  any  otlier  written  contract. 

What  was  decided  in  this  case,  and  what  was  said.  had. refer- 
ence solely  to  the  payee  of  a  promissory  note  who  had  indorsed  the 
note  in  blank,  and  had  no  l)earing  whatever  U])on  the  rights  or  obli- 
gations of  a  third  party,  who  had  placed  his  name  on  the  back  of  a 
note.  Moreover,  it  is  manifest  that  there  was  no  intention  to  over- 
rule or  modify  the  doctrine  announced  in  Boynton  v.  Pierce,  79  111. 
145  ;  Stozcell  V.  Rayinniid,  St,  111.  120 ;  and  liberhart  v.  Page,  89  111. 
550, — from  the  ruling  in  Batik  v.  Xixon.  125  111.  618.  18  X.  E!  203. 
This  case  was  heard  and  decided  some  time  after  Johnson  v.  Glover 
had  been  decided,  and  the  doctrine  of  lioynton,  Stowell  and  Eber- 
hart  cases  was  approved,  and  those  cases  were  cited  as  sustaining 
the  rule  announced.  We  think  therefore  that  the  ruling  of  the  cir- 
cuit court,  in  the  admission  of  evidence,  that  the  defendants  might 
resort  to  parol  evidence  to  prove  what  contract  was  made  between 
the  parties  was  correct.  The  signature  of  the  defendants  written 
on  the  back  of  the  notes  was  ])rima  facie  evidence  that  the  defend- 
ants assumed  the  liability  of  guarantors:  ])ut  whether  the  evidence 
introducerl  was  sufficient  to  remove  the  legal  j^resumption  of  guar- 
anty was  a  question  of  fact  for  the  trial  court,  wdio  heard  the  cause 
without  a  jury,  which  does  not  arise  here,  and  upon  which  we  ex- 
press no  opinion.  Whether  the  propositions  of  law  held  or  refused 
bv  the  court  are  technically  accurate  it  will  not  be  necessary  to 
determine  as  the  judgment  will  have  to  be  reversed  on  other 
grounds.  What  has  already  been  said  may  be  regarded  as  suf- 
ficient on  another  trial  to  obviate  any  supposed  error  in  this  regard. 

As  was  said  in  the  first  part  of  this  opinion,  judgment  was 
rendered  against  one  of  the  defendants  by  default,  and  in  the  trial 
the  court  found  in  favor  of  the  other  defendants,  and  judgment 
was  rendered  in  their  favor  against  the  plaintiffs.  The  plaintift's 
now  assign  as  error  the  rendition  of  judgment  in  their  favor  against 
one  of  the  defendants.  This  error  is  well  assigned.  TJiayer  v. 
Finley,  36  111.  262. 

The  action  was  brought  on  a  joint  contract,  and  the  general 
rule  in  such  cases  is  that  judgment  must  l)e  rendered  against  all 
or  none.  Davidson  v.  Bond,  12  111.  84;  Clallin  v.  Dunne.  I2()  111. 
248,  21  X.  E.  834. 

The  judgments  of  the  ai)i)ellate  and  circuit  courts  will  be  re- 
versed, and  the  cause  remanded  to  the  circuit  court. 


weinberg  \'s.  the  regents.  41 

Weinberg  z's.  The  Regents  oe  the  University  of  Michigan. 
Impleaded.  Etc.    ( 1893), 

97  Mich.  246;  56  N.  W.  605. 
Error  to  Washtenaw.    (Kinne,  J.) 

Charles  R.  Whit  man,  for  appellant. 
Bogle  &  MarqiianU,  for  plaintiff. 

Montgomery,  J.  The  plaintiff'  brought  suit  against  the  Re- 
gents of  the  University  of  ^Michigan.  James  B.  Angell.  James  H. 
Wade  and  Charles  R.  Whitman  to  recover  the  value  of  materials 
furnished  to  one  Lucas,  a  subcontractor  in  the  building  of  the 
University  Hospital.  The  right  of  action  was  claimed  under  Act 
No.  94,  Laws  of  1883.  as  amended  by  Act  No.  45.  Laws  of  1885 
(3  How.  Stat..  Sec.  8411a).     The  declaration  avers: 

"That  the  Regents  of  the  University  of  Michigan  is  a  public  corpora- 
tion organized  and  existing  under  the  laws  of  the  State  of  Michigan, 
created  for  the  government  of  the  University  of  Michigan,  which  said 
institution  belongs  to  and  is  the  property  of  the  State  of  Michigan,  and  is 
maintained  at  the  expense  of  this  State;  that  the;  defendant  James  B. 
Angell  is  President  of  the  Regents  of  the  University  of  Michigan  and  the 
executive  head  of  the  University  of  Michigan;  that  the  defendant  James 
H  Wade  is  the  Secretary;  that  the  defendant  Charles  R.  Whitman  is  a  mem- 
ber of  the  Regents  of  the  University  of  Michigan;  that  on  or  about  the 
months  of  July  and  August,  A.  D.  1890,  the  Regents  of  the  University  of 
Michigan  advertised  for  proposals  for  the  erection  and  completion  of  a 
hospital  building  for  the  University  of  ^Michigan,  which  said  hospital 
building,  so  to  be  erected  and  completed,  was  to  be  and  has  been  built  at 
the  expense  of  this  State;  that  afterwards,  to-wit,  on  the  first  day  of 
October,  A.  D.  1890,  in  pursuance  to  said  advertisement  and  proposals  re- 
ceived, the  bid  of  one  William  Biggs,  of  the  city  of  .-Ynn  Arbor,  was  accepted 
and  on  or  about  the  date  aforesaid  the  Regents  of  the  University  of  Mich- 
igan entered  into  a  contract  with  said  William  Biggs  for  the  erection  and 
completion  of  said  hospital,  in  consideration  of  the  sum  of,  to-wit, 
$78,556,  which  said  contract  was  signed  by  the  defendants  James  B.  Angell, 
James  H.  Wade,  President  and  Secretary  as  aforesaid,  and  by  said  William 
Biggs;  that  the  defendant  Charles  R.  Whitman  was  a  member  of  the  com- 
mitee  on  buildings  and  grounds  appointed  by  the  Regents  of  the  Univer- 
sity of  Alichigan,  which  iDuilding  committee  was  given  full  authority  to  act 
for  the  said  Regents  ot  the  University  of  Michigan  until  otherwise  ordered; 
that  said  Charles  R.  Whitman,  as  a  member  of  said  commitee,  was  prin- 
cipally in  charge  of  said  undertaking  of  building  said  hospital ;  that  after- 


42  GUAR.WTY    AND    SURF.TYSHIP. 

wards  the  said  William  Biggs,  by  contract  with  one  John  Lucas,  sublet  a 
portion  of  the  job  for  the  building  and  erection  of  said  hospital;  that  the 
plaintiff  Julius  Weinberg  is  a  laborer  and  material  man,  engaged  in  the 
business  of  buying,  selling  and  furnishing  stone,  sand,  and  other  material 
to  contractors  and  other  persons  engaged  in  building,  and  other  business 
in  which  such  materials  are  used;  that  after  the  contract  so  made  as  afore- 
said by  the  Regents  to  said  Biggs,  and  by  Biggs  with  said  John  Lucas, 
said  Lucas,  subcontractor  as  aforesaid,  applied  to  the  plaintiff  to  furnish 
stone  for  the  use  m  said  hospital  building,  for  which  said  Lucas  agreed 
to  pay  plaintiff  85  cents  for  every  16  feet  in  length  by  one  foot  thick  and 
one  foot  high,  as  the  same  was  laid  in  the  wall  of  said  building. 

"And  the  plaintiff  further  says  that  the  defendants,  the  Regents  of 
the  University  of  Michigan,  James  B.  Angell,  James  H.  Wade  and  Charles 
R.  Whitman,  were  the  board,  officers  and  agents  of  the  State  of  Michigan, 
and  made  and  entered  into  the  contract  for  the  erection  of  said  hospital 
for  and  on  behalf  of  the  State  of  Michigan,  and  had  the  same  built  at  the 
expense  of  this  State;  that  it  was  the  duty  of  said  defendants  as  afore- 
said, under  Section  Siiia,  as  amended  by  Act  No.  45,  Public  Acts  of  1885, 
and  Sections  8411b  and  8411c,  Howell's  Annotated  Statutes,  to  require 
sufficient  security  by  bond  for  the  payment  by  the  contractors  and  all  sub- 
contractors for  all  labor  ])erformed  and  materials  furnished  in  the  erection, 
repairing,  or  ornamenting  of  said  hospital  building.'" 

The  declaration  further  avers  tliat  plaintiff  furnished  the 
material  in  question,  relyinij  on  such  l)ond,  and  also  avers  that  he 
has  not  received  his  pay,  and  concludes : 

"And  plaintiff  furlhor  says  that  said  defendants,  in  disregard  of  their 
duty  aforesaid,  negligently  and  carelessly,  and  in  disregard  of  the  rights 
of  the  plaintiff,  neglected  to  require  of  said  contractor  the  bond,  aforesaid, 
and  permitted  the  said  contractor  to  enter  into  said  contract  for  the  erec- 
tion of  said  hospital  building,  and  to  enter  upon  the  performance  thereof,, 
without  givmg  security,,  by  bond  or  otherwise,  for  the  payment  by  said 
contractor  and  all  subcontractors  for  the  labor  and  materials  furnished 
him  or  any  subcontractor,  as  required  In'  said  statute." 

To  this  declaration  the  defendants  demurred,  and  the  plaintiff 
joined  in  demurrer,  the  demurrer  was  sustained  as  to  the  individ- 
ual defendants,  and  overruled  as  to  the  Kegents  of  the  University^ 
and  the  plaintiff  was  permitted  to  amend  as  to  the  individual  de- 
fendants. The  defendant  the  l-iegents  of  the  University  of  Mich- 
igan brings  error.  TIk'  ])laintifl"  has,  however,  amended  his 
declaration  as  against  both  defendants,  and  it  is  requested  by  both 
parties  that  the  question  of  liability  be  here  determined. 

It  is  contended  on  behalf  of  the  defendant  that  the  statute 
does  not  apply  to  the  Regents  of  the  University  of  Michigan  ;  that 


WEINBERG  VS.   THE  REGENTS.  43- 

the  University  buildings  are  not  built  at  the  expense  of  the  State^ 
nor  are  they  contracted  for  on  behalf  of  the  State,  within  the  mean- 
ing of  this  statute ;  that  they  are  constructed  by  a  constitutional 
corporation,  which  may  sue  and  be  sued,  and  has  power  to  take  and 
hold  real  estate  for  any  purpose  which  is  calculated  to  promote  the 
interests  of  the  University. 

The  section,  as  amended  by  Act  No.  45,  Laws  of  1885,  pro- 
vides : 

"That  when  pubHc  buildings  or  other  public  works  or  improvements 
are  about  to  be  built,  repaired  or  ornamented  under  contract,  at  the  ex- 
pense of  this  state,  or  of  any  county,  city,  village,  township,  or  school 
district  thereof,  it  shall  be  the  duty  of  the  board  of  officers,  or  agents,  con- 
tracting on  behalf  of  the  state,  county,  city,  village,  township  or  school 
district,  to  require  sufficient  security  by  bond  for  the  payment  by  the  con- 
tractor and  all  subcontractors  for  all  labor  performed  or  materials  fur- 
nished in  the  erection,  repairing  or  ornamenting  of  such  building,  works 
or  improvements."^ 

We  think  the  statute  sufficiently  broad  to  cover  the  contract  • 
in  question.     Act  No.  145,  Laws  of  1889,  appropriated — 

"For  the  purchase  of  a  site  for,  and  the  erection  of,  a  hospital,  for 
the  year  1889,  the  sum  of  Twenty-Five  Thousand  Dollars,  and  for  the 
year  1890,  the  sum  of  Twenty- Five  Thousand  Dollars :  Provided,  how- 
ever, That  no  part  of  the  above-named  appropriations  for  the  purchase  ot 
a  site  for  and  the  erection  of  a  hospital  shall  be  paid  out  of  the  Treasury 
until  the  City  of  Ann  Arbor  shall  have  bound  itself  to  contribute  the  sum 
of  $25,000  for  the  same  purpose." 

Section  2  provides  for  the  assessment  of  taxes  to  pay  this 
appropriation.  Certainly,  then,  the  undertaking  was  at  the  ex- 
pense of  the  State  and  of  the  City  of  Ann  Arbor,  the  contribution 
of  the  City  of  Ann  Arbor,  however,  becoming  State  property  upon 


iThe  statute  (C.  L.  1897 — 10743-10745)  quoted  in  part,  consists  of  three  sections, 
the  second  and  third   being  as   follow: 

"(10744)  Sec.  2.  Such  bond  shall  be  executed  by  such  contractor  to  the  people 
of  the  State  of  Michigan,  in  such  amount,  and  with  such  sureties,  as  shall  be  approved 
by  the  board,  officers  or  agents  acting  on  behalf  of  the  state,  county,  city,  village, 
township  or  school  district  as  aforesaid,  and  conditioned  for  the  payment  by  such  con- 
tractor or  any  subcontractor  as  the  same  may  become  due  and  payable,  of  all  indebted- 
ness which  may  accrue  to  anv  person,  firm  or  corporation  on  account  of  any  labor  per- 
formed or  materials  furnished  in  the  erection,  repairing  or  ornamenting  of  such 
buildings  or  works.  Such  bond  shall  be  deposited  with  and  held  by  such  board,  officer 
or  agent,  for  the  use  of  anv  party  interested  therein." 

"(1074=;)  Sec.  3.  Such  bond  may  be  prosecuted,  and  recovery  had,  by  any  per- 
son, firm  or  corporation  to  whom  any  money  shall  be  due  and  payable  on  account  of 
having  performed  anv  labor,  or  furnished  any  materials,  in  the  erection,  repairing  or 
ornamenting  of  such  building  or  works,  in  the  name  of  the  people  of  this  state,  for  the 
use  and  benefit  of  such  person,  firm  or  corporation:  Provided,  That  the  people  of  this- 
state  shall,  in  no  case  brought  under  the  provisions  of  this  act,  be  liable  for  costs." 


44  C.L'ARANTV    AND    SUUKTN'S  1 1 1 1'. 

its  a])propriation.  W'c  think  it  clear  also  that  the  Regents  who 
acted  in  the  matter  were  agents  contracting  on  l)ehalf  of  the  State. 
They  are  officers  elected  hy  the  voters  of  the  State,  whose  duties 
relate  to  the  control  of  jnihlic  ]iro])ert\'.  It  is  altogether  too  tech- 
nical to  say  thai  the  Kcgcnls  were  contracting  on  hehalf  of  the 
University  ;  for,  while  this  is  in  a  sense  true,  it  is  also  true  that 
they,  hy  the  very  contract  in  ([uestion,  provided  for  the  expendi- 
ture of  State  money,  and  for  the  construction  of  a  ])uilding  which 
it  would,  1  think,  he  news  to  most  residents  of  Michigan  to  learn 
is  not  State  property.  This  is  as  nmch  so  as  in  the  case  of  a  school 
district,     .liiditor  General  v.  Regents.  S3  Mich.  467. 

It  is  contended  hy  the  defendant  that  the  liability  for  neglect 
to  require  this  bond  attaches  to  the  individuals  who  rejiresented 
the  State,  county,  city,  village,  townshij)  or  school  district  in  the 
letting  of  the  contract,  and  not  to  the  State  or  county  or  corpora- 
tion of  which  they  are  directly  the  officers  or  agents.  We  think 
the  defendant  is  right  in  this  contention.  In  Owen  v.  Hill,  67 
Mich.  43,  and  Plminner  v.  Ken)ie(ly.  jj  id.  295.  the  action  was 
brought  against  the  individuals  composing  the  board.  In  I  Veils 
V.  Board  of  lidueafion.  78  Mich.  260,  it  was  lield  diat  the  officers 
were  per.sonallv  liable  for  materials  on  failure  to  take  the  reciuired 
bond.  Our  attention  has  not  been  called  to  any  case  in  which 
the  municipality,  in  the  case  of  a  township  or  school  district,  or  a 
public  or  (//U7.s^/-public  corporation,  has  been  held  liable  as  such, 
and  it  seems  to  us  that  there  are  insuperable  objections  to  so 
holding.  The  duty  rests  u]:)on  the  officers  of  the  State,  as  well 
as  cities,  counties  and  school  districts.  Can  it  be  intended  that 
the  State,  which  must  act  through  its  iniblic  officers,  is  to  be  held 
liable  as  f<  r  a  tort  for  a  mere  neglect  to  take  the  bond  required 
by  this  statute?  It  is  trlue  that  it  is  urged  that  the  T.oard  of 
Regents  is  an  agent  of  the  State.  This  luay  be  true  in  a  certain 
sense,  but  we  think  the  board,  as  a  board,  is  not  the  agent  con- 
templated by  this  statute,  biU  that  the  officers  who  act  directly 
are  the  ones  who,  as  individuals,  fall  within  the  purview  of  the 
Act.  It  may  be  doubtful  to  what  extent  the  board  of  managers 
of  a  hospital,  which  is  a  public  institution,  like  the  one  in  ques- 
tion, can  be  made  liable  for  negligence :  as  to  which  see  McDon- 
ald V.  Hospital.  120  Mass.  432;  Glaviti  v.  Hospital,  12  R.  T.  411. 
We  do  not  deem  it  necessary  to  decide  whether,  under  such  cir- 
cumstances as  are  involved  in  those  two  cases,  the  board  of  man- 
.agers   of   the   hospital,   as  a  corporation,   may   not  be  liable.     In 


WEINBERG  VS.   THE  REGENTS.  i^ 

such  a  case  it  might  well  be  contended  that  it  has  undertaken 
to  perform  certain  duties,  and  established  relations  toward  the 
patients  which  impose  upon  the  body  in  control  certain  duties. 
But  the  ground  of  the  plaintiff's  right  to  recover  at  all  in  this 
case  is  that  this  property  is  State  property,  and  further  that  the 
building  is  being  constructed  at  the  expense  of  the  State,  and 
that  the  members  of  the  board  were  acting  for  and  on  l)ehalf  of 
the  State  in  making  the  contract.  It  could  not  be  contemplated 
that  the  State  or  the  public  corporation  is  to  be  made  liable.  The 
individual  guilty  of  the  wrong  or  neglect  of  duty  is  the  one 
against  whom  the  action  sb.ould  be  directed.  Cooley,  Torts.  621. 
The  wrong  is  in  the  nature  of  a  tort  consisting  of  neglect  of  duty 
owing  to  the  public  generally,  for  which  the  public  corporation  as 
such  is  not  liable,  unless  made  so  by  statute. 

It  follows  from  the  views  expressed  that  the  judgment  should 
be  reversed,  and  the  case  remanded,  that  the  plaintiff  may  proceed 
against  the  individuals  named  in  the  amended  declaration. 

McGratii,  J.,  concurred  with  ]\IoxT(;;o^[ERY,  J. 

Grant,  J.  I  concur  in  the  opinion  of  my  brother  ]^Iont- 
gomery  that  under  Act  No.  94,  Laws  of  1883.  as  amended  by  Act 
No.  45,  Laws  of  1885,  the  public  corporation  cannot  be  made 
liable,  but  only  those  officers  or  agents  of  such  corporation  to 
whom  is  committed  the  duty  of  letting  contracts  for  the  erection 
of  public  buildings  or  making  public  improvements.  But  I  can- 
not concur  in  holding  that  the  statute  applies  to  the  corporation 
known  as  "The  Regents  of  the  LTniversity  of  Michigan."  The 
grounds,  buildings  and  other  property  of  all  the  other  State  insti- 
tutions, penal,  reformatory,  charitable  and  educational,  belong  to 
the  State.  These  institutions  are  the  creations  of  the  Legislature. 
Thev  are  under  the  exclusive  control  and  management  of  the 
State.  The  State  which  created  them,  may  at  any  time  repeal  the 
laws  by  which  they  were  established  and  sell  the  property.  The 
public  buildings,  public  works  and  public  improvements  mentioned 
in  the  statute,  mean  those  over  which  the  State  has  control.  This 
is  evident  from  the  language  of  the  statute,  which  says : 

"It  shall  be  the  duty  of  the  board  of  officers,  or  agents,  contracting 
on  behalf  of  the  State,  *****  to  require  sufficient  security  by  bond,"  etc. 

The  Regents  make  no  contracts  on  behalf  of  the  State,  but 
solely  on  behalf  of  and  for  the  benefit  of  the  University.     All  the 


46        •        GUARANTY  AND  SURETYSHIP. 

Other  public  corporations  nicntioiicd  in  the  Constitution,  which 
have  occasion  to  erect  pubHc  Iniihhnfi^s  or  to  make  puljHc  improve- 
ments, are  expressly  included  in  this  statute.  Expressio  unius 
est  exchtsio  alterius.  It  expressly  enumerates  the  state,  counties, 
cities,  villages,  townships  and  school  districts.  If  the  University 
were  under  the  control  and  management  of  the  legislature,  it 
would  undoubtedly  come  within  this  statute,  as  do  the  Agri- 
cultural College,  Normal  School,  State  Public  School,  asylums, 
]:)risons,  reform  schools,  houses  of  correction,  etc.  But  the  general 
supervision  of  the  l.^niversity  is,  by  the  Constitution,  vested  in  the 
Regents.    Const.  Art.  13,  §§  7,  8. 

"Sec.  7.  The  Regents  of  the  University,  and  their  successors  in 
office,  shall  continue  to  constitute  the  body  corporate  known  by  the  name 
and  title  of  "The  Regents  of  the  University  of  Michigan.' 

"Sec.  8.  The  Regents  of  the  University  shall,  at  their  first  annual 
meeting,  or  as  soon  thereafter  as  may  be,  elect  a  President  of  the  Univer- 
sity, who  shall  be  ex-officio  a  member  of  their  Board,  with  the  privilege 
of  speaking,  but  not  of  voting.  He  shall  preside  at  the  meetings  of  the 
Regents,  and  be  the  principal  executive  officer  of  the  University.  The 
Board  of  Regents  shall  have  the  general  supervision  of  the  University, 
and  the  direction  and  control  of  all  expenditures  horn  the  University 
interest  fund." 

Section  2,  Art.  13,  is  as  follows: 

"The  proceeds  from  the  sales  of  all  Innds  that  have  been  or  here- 
after may  be  granted  by  the  United  States  to  the  State  for  educational 
purposes,  and  the  proceeds  of  all  lands  or  other  property  given  by  individ- 
uals or  appropriated  by  the  State  for  like  purposes,  shall  be  and  remain  a 
perpetual  fund,  the  interest  and  income  of  which,  together  with  the  rents 
of  all  such  lands  as  may  remain  unsold,  shall  be  inviolably  appropriated 
and  annually  applied  to  the  specific  obiects  of  the  original  gift,  grant,  or 
ai)propriation.'' 

I'nder  the  Constitution,  the  State  cannot  control  the  action 
of  the  Regents.  It  cannot  add  to  or  take  away  froin  its  property 
without  the  consent  of  the  Regents.  Tn  making  appropriations 
for  its  support,  the  Legislature  may  attach  any  conditions  it  may 
deem  expedient  and  wise,  and  the  Regents  cannot  receive  the 
appropriation  without  complying  with  the  conditions.  This  has 
been  done  in  several  instances. 

Property  aggregating  in  \alue  nearly  or  quile  half  a  million 
of  dollars  has  been  donated  t(j  the  University  by  private  individ- 
uals.    Such    ])roperty    is    the    properly    of   the   University.     It  is 


WEINBERG    VS.   THE    REGENTS.  47 

not  under  the  control  of  the  State  when  it  acts  through  its  execu- 
tive or  legislative  departments,  but  of  the  Regents,  who  are  di- 
rectly responsible  to  the  people  for  the  execution  of  their  trust. 
So,  when  the  State  appropriates  money  to  the  University  it  passes 
to  the  Regents  and  becomes  the  property  of  the  University,  to  be 
expended  under  the  exclusive  direction  of  the  Regents,  and  passes 
beyond  the  control  of  the  State  through  its  legislative  department. 
The  University  and  the  school  district  are  both  provided  for 
in  the  same  article  of  the  Constitution.     Why  should  the  Legis- 
lature mention  the   school   district  in  this   statute  and  leave  out 
the  University,  if  it  was  its  intention  to  include  the  latter?     The 
University  is  the  property  of  the  people  of  the  State,  and  in  this 
sense  is  State  property,  so  as  to  be  exempt  from  taxation.     Audi- 
tor-General V.  Regeiits,  83  Mich.  467.     But  the  people,  who  are 
the   corporators   of   this   institution    of   learning,    have,    by    their 
Constitution,  conferred  the  entire  control  and  management  of  its 
affairs  and  property   upon   the   corporation   designated   as   "The 
Regents  of  the  University  of  Michigan,"  and  have  thereby  ex- 
cluded all  departments  of  the  State  government  from  any  inter- 
ference therewith.     The  fact  that  it  is  State  property   does   not 
bring  the  Regents  within  the  purview  of  the  statute.     The  people 
may,  by  their  constitution,  place  any  of  its  institutions  or  property 
beyond  the  control  of  the  Legislature. 

This  Court  has  refused  to  compel  the  Regents  to  comply  with 
certain  provisions  of  acts  of  the  Legislature  against  their  judgment 
that  they  were  not  for  the  best  interests  of  the  University.  Peo- 
ple V.  Regents,  4  Mich.  104;  People  v.  Regents.  18  id.  469;  People 
V.  Regents.  30  id.  473.  The  Legislature  was  undoubtedly  cog- 
nizant of  the  above  decisions,  for  the  questions  involved  were  of 
considerable  public  interest. 

These  considerations  lead  me  to  the  conclusion  that  the  Re- 
gents are  not  included  in  this  act,  and  that  the  judgment  should 
be  reversed,  and  judgment  entered  in  this  Court  for  the  defendants. 

Judgment  entered  accordingly. 

Hooker,  C.  J.,  and  Long,  J.,  concurred  with  Grant,  J. 


48  GUARAXTV    AND    SURF/rVSIIIP. 

United  States,  to  use  of  Anniston  i'liM-:  &  Foundry  Co.,  vs. 
National  Surf.tv  Co.   (1899). 

92  Fed.  549  (Eighth,  C.  C.  A.) 

In  error  to  the  C'ircuit  Court  of  the  Cnited  States  for  the 
Eastern   District  of   Missouri. 

This  suit  was  hrought  liv  the  Anniston  Pipe  &  Foundry  Com- 
pany, the  plaintiff  in  error,  in  the  name  of  the  United  States, 
against  the  National  Surety  Conii)any.  the  defendant  in  error, 
on  a  hond  executed  hy  the  defendant  on  July  15,  1895,  as  surety 
for  T.  J.  I'rosser.  the  hond  having  been  executed  pursuant  to  the 
provisions  of  an  act  of  congress  ai)proved  August  13,  1894  (28 
Stat.  278,  c.  280),  which  is  as  follows: 

"All  Act  for  the  [>rotcction  of  fycrsoiis  furuishin;^',   materials  and  labor  for 
the  coiistntctioii  of  public  zcorL's. 

"Be  it  enacted,"  etc..  "that  hereafter  any  person  or  persons  entering 
into  a  formal  contract  with  the  United  States  for  the  constrnction  of  any 
public  building,  or  the  ])rosecr,tion  and  completion  of  any  public  work  or 
for  repairs  upon  any  public  building  or  public  work,  shall  be  required 
before  commencing  such  work  to  execute  the  usual  penal  bond,  with  good 
and  sufficient  sureties,  with  the  additional  obligations  that  such  contractor 
or  contractors  shall  promptly  make  payivienls  to  all  persons  supplying  him 
or  them  labor  and  materials  in  the  prosecution  of  the  work  provided  for  in 
such  contract ;  and  any  person  or  persons  making  application  therefor,  and 
furnishing  affidavit  to  the  department  under  the  direction  of  which  said 
work  is  being,  or  has  been  prosecuted,  that  labor  or  materials  for  the  pros- 
ecution of  such  work  has  been  supplied  by  him  or  them,  and  payment  for 
which  has  not  lieen  made,  shall  be  furnished  with  a  certified  copy  of  .said 
contract  and  bond,  upon  which  said  per.->on  or  persons  supplying  such  labor 
and  materials  shall  have  a  right  of  action  and  shall  be  authorized  to  bring 
suit  in  the  name  of  the  United  States  for  his  or  their  use  and  benefit 
against  said  contractor  and  sureties  and  to  prosecute  the  same  to  final 
judgment  and  execution:  provided,  that  such  action  and  its  prosecution 
shall  involve  the  United  States  in  no  expense.  ' 

T.  j.  I'rosser,  the  i)rinri])al  in  the  hond,  had  entered  into  a 
contract  with  Charles  H.  Thonii)son,  assistant  quartermaster  of  the 
United  States  army,  who  acted  for  and  in  behalf  of  the  United 
States  of  America,  for  the  construction  of  a  boiler  and  |)nmp  house, 
pumping  machinery,  and  connections,  water  mains,  steel  trestle, 
and  water  tank,   etc.,   for  the   water-supply  system    for  the  new 


U.    S.    vs.    NATIONAL    SIJRETY    CO.  49 

military  post  near  Little  Rock,  Ark. ;  and  the  bond  contained  a 
condition,  in  substance,  that  if  said  I'rosser,  his  heirs,  executors, 
and  administrators,  should  in  all  respects  duly  and  fully  observe 
and  perform  all  and  singular  the  covenants,  conditions,  and  agree- 
ments in  and  by  said  contract  agreed  to  he  observed  and  perfomied 
by  said  Prosser,  according  to  the  true  intent  and  meaning  of  said 
contract,  as  well  during  any  period  of  extension  of  said  contract 
as  during  the  original  term,  and  should  make  full  payments  to 
all  persons  supplying  him  labor  or  materials  in  the  prosecution 
of  the  work  provided  for  in  said  ccMitract,  then  the  obligation 
should  become  void,  but  otherwise  remain  in  full  force  and  virtue. 
The  plaintiiT  company  sued  to  recover  of  the  defendant,  as  surety 
in  said  Ijond,  the  sum  of  $842.98,  with  interest  and  costs,  being 
the  value  of  certain  water  pipe  which  it  had  supplied  to  Prosser, 
subsequent  to  the  execution  of  the  aforesaid  bond  and  contract, 
to  enable  him  to  execute  the  agreement  with  the  government,  and 
which  pipe  so  supplied  he  had  actually  used  for  that  purpose, 
but  had  not  paid  for.  For  a  defense  to  the  action  the  defendant 
pleaded,  and  the  trial  court  so  found,  that  subsequent  to  the  exe- 
cution of  the  aforesaid  bond,  and  the  contract  which  it  was  given 
to  secure,  the  government  had  entered  into  a  further  agreement 
with  Prosser,  modifying  the  terms  of  the  original  contract,  or, 
more  accurately,  the  specifications  thereto  attached,  in  such  a 
manner  that  Prosser  was  required  to  lay  only  1,866  linear  feet  of 
six-inch  water  pipe  in  place  of  3,850  feet,  as  specified  in  the  origi- 
nal contract,  and  that  this  change  in  the  terms  of  the  original 
contract,  or  rather  the  plans  for  its  execution,  was  made  without 
the  knowledge  or  consent  of  the  surety  company.  In  view  of  the 
change  in  the  plans  for  the  execution  of  the  contract  which  less- 
ened the  amount  of  water  pipe  necessary  to  be  supplied  and  used, 
the  trial  court  ruled  that  the  plaintiff  could  not  recover.  It  ac- 
cordingly rendered  a  judgment  in  favor  of  the  defendant,  to 
reverse  which  the  record  has  been  removed  to  this  court  by  a  writ 
of  error. 

Truman  A.  Post,  for  plaintiff  in  error. 

/.  E.  McKcighaii    (Shcpard  Barclay,  M.  F.   Watts,  and   G. 
A.   Vandc-i'ccr,  on  the  brief),  for  defendant  in  error. 

Before  C.vldwell,  vSa.\vuorn,  and  Tiiavkr.  Circuit  Judges. 

Thayer,  C.  J.,  after  stating  the  case  as  above,  delivered  the 
opinion  of  the  court. 


50  GUARANTY    AND    SURETYSHIP. 

it  is  a  familiar  rule  of  law  thai  the  coniract  of  a  surely  must 
be  strictly  construed,  and  that  il  cannot  l)e  enlarged  Ijy  construc- 
tion, and  that  \vhen  a  bond,  with  sureties,  has  been  given  to  secure 
the  performance  of  a  contract,  and  the  principal  in  the  btMid  and 
the  person  for  whose  benefit  it  was  given  make  a  material  change 
in  the  contract  without  the  consent  of  the  surety,  the  latter  is 
thereby  discharged.  l'"or  present  purposes,  it  may  be  conceded 
that  the  finding  of  the  lower  court  in  the  case  at  bar  discloses 
such  a  modification  of  the  original  contract  between  Prosser  and 
the  United  States  as  would  fall  within  ihe  rule  last  stated,  and 
release  the  defendant  company  from  ils  liability,  if  the  United 
States  was  suing  for  its  own  benefit  for  a  breach  of  some  provision 
of  the  contract,  Ihe  due  performance  of  which  the  bond  was  in- 
tended to  secure.  Such,  however,  is  not  the  case.  The  suit  is 
not  l)rought  by  the  United  States  to  recover  any  damage  which 
it  has  sustained ;  neither  is  it  brought  to  enforce  any  provision 
of  the  contract  which  was  entered  into  between  the  United  States 
and  the  ])rincipal  in  the  bond.  On  the  contrary,  the  action  is 
one  to  enforce  a  stipulation  found  in  the  bond,  and  only  in  the 
bond,  which  was  intended  solely  for  the  protection  of  laborers 
and  material  men  who  might  furnish  labor  and  materials  while 
the  contract  was  being  executed  by  Prosser.  The  United  States 
is  merely  a  nominal  jjlaintifif,  and  as  such,  under  the  provisions  of 
the  act  of  congress,  it  cannot  be  held  liable  even  for  costs.  The 
real  plaintiff  is  the  corporation  for  whose  use  the  suit  was  brought, 
and  it  sues  to  enforce  an  obligation  which  congress  required  to  be 
inserted  in  the  bond  for  its  protection  and  for  the  protection  of 
others  who  might  furnish  labor  or  materials  while  the  work  was 
in  ]:)rogress. 

The  real  question  to  be  considered,  therefore,  is  whether  the 
act  of  congress  under  which  the  bond  in  suit  was  taken  constituted 
the  United  States  the  agent  or  representative  of  the  persons  who 
supplied  labor  and  materials  after  the  contract  and  Ijond  were 
executed,  in  such  a  sense  that  its  action  in  consenting  to  a  modifi- 
cation of  the  contract  with  Prosser  must  be  imputed  to  the  labor- 
ers and  material  men,  and  held  to  deprive  them,  as  well  as  the 
government,  of  all  recourse  agahist  the  surety. 

The  act  of  congress  of  August  13.  1894,  does  not  authorize 
the  United  States  to  bring  suits  of  its  own  motion  against  the 
obligors  in  such  bonds  as  are  therein  provided  for,  to  recover  what 
is  due  to  laborers  and  material  men.     It  is  not  empowered  to  act 


U.    S.    vs.    NATIONAL   SURETY    CO.  51 

in  their  behalf  in  that  respect,  but  such  actions  can  only  be  brought 
at  the  instance  of  persons  who  furnish  labor  and  materials,  who 
are  authorized,  without  previous  leave  being  obtained  from  any 
executive  department,  to  sue  in  the  name  of  the  United  States, 
and  control  the  litigation  precisely  as  they  might  control  it  if 
the  suits  were  brought  in  their  own  name.  It  is  also  noticeable 
that  in  its  title  the  act  professes  to  be  one  for  the  benefit  "of 
persons  furnishing  materials  and  labor,"  and  that  in  the  body  of 
the  act  the  form  of  the  condition  to  be  inserted  in  the  bond  for 
the  benefit  of  the  United  States  is  not  in  terms  prescribed,  the  only 
provision  in  that  regard  being  that  the  bond  shall  be  "the  usual 
penal  bond"  ;  meaning,  evidently,  such  an  obligation  for  the  gov- 
ernment's own  protection  as  it  had  long  been  in  the  habit  of  exact- 
ing from  those  with  whom  contracts  were  made  for  the  doing  of 
public  work.  On  the  other  hand,  the  condition  for  the  benefit  of 
persons  who  might  furnish  materials  or  labor  is  carefully  pre- 
scribed. Obviously,  therefore,  congress  intended  to  afi^ord  full 
protection  to  all  persons  who  supplied  materials  or  labor  in  the 
construction  of  public  buildings  or  other  public  works,  inasmuch 
as  such  persons  could  claim  no  lien  thereon,  whatever  the  local 
law  might  be,  for  the  labor  and  materials  so  supplied.  There 
was  no  occasion  for  legislation  on  the  subject  to  which  the  act 
relates,  except  for  the  protection  of  those  who  might  furnish 
materials  or  labor  to  persons  having  contracts  with  the  govern- 
ment. The  bond  which  is  provided  for  by  the  act  was  intended 
to  perform  a  double  function, — in  the  first  place,  to  secure  to  the 
government,  as  before,  the  faithful  performance  of  all  obligations 
which  a  contractor  might  assume  towards  it;  and,  in  the  second 
place,  to  protect  third  persons  from  whom  the  contractor  obtained 
materials  or  labor.  Viewed  in  its  latter  aspect,  the  bond,  by 
virtue  of  the  operation  of  the  statute,  contains  an  agreement  be- 
tween the  oljligors  therein  and  such  third  parties  that  they  shall 
be  paid  for  whatever  labor  or  materials  they  may  supply  to  enable 
the  principal  in  the  bond  to  execute  his  contract  with  the  United 
States.  The  two  agreements  which  the  bond  contains,  the  one 
for  the  benefit  of  the  government,  and  the  one  for  the  benefit  of 
third  persons,  are  as  distinct  as  if  they  were  contained  in  separate 
instruments,  the  government's  name  being  used  as  obligee  in  the 
latter  agreement  merely  as  a  matter  of  convenience. 

In  view  of  these  considerations,  we  are  of  opinion  that  the 
sureties  in  a  bond,  executed  under  the  act  now  in  question,  cannot 


52  GUAUAXTY    AND    SURETYSHIP. 

claim  exemption  from  liability  to  persons  who  have  sn])])lic(l  labor 
or  materials  to  their  principal  to  enable  him  Ui  cxeciUr  his  con- 
tract with  the  L'nited  States,  simply  because  the  government  and 
the  contractor,  without  the  surety's  knowledge,  have  made  some 
changes  in  the  contract,  subsequent  to  the  execution  of  the  bond 
given  to  secure  its  performance,  which  do  not  alter  the  general 
character  of  the  work  contemplated  by  the  contract  or  the  general 
character  of  the  materials  which  are  necessary  for  its  execution. 
When  the  government  has  executed  the  contract  and  taken  and 
approved  the  bond,  it  ceases  to  be  the  agent  of  third  ])arties  wlmm 
the  contractor  employs  in  the  execution  of  the  work  or  from  whom 
he  ol)tains  materials,  and  the  rights  of  such  persons  under  the 
bond  are  unalfected  by  subsequent  transactions  between  the  gov- 
ernment and  the  contractor.  If  such  were  not  the  case,  it  would 
be  possible  for  the  contractor  and  some  officer  of  the  United  States, 
by  making  some  change  in  the  contract  or  specifications,  to  deprive 
laborers  and  material  men  of  all  recourse  against  the  sureties 
in  the  bond  after  tlic\-  had  sufjijlied  materials  and  labor  of  great 
value  in  reliance  upon  its  provisions.  It  is  not  ])robable  that 
such  a  result  was  contemplatf^d  b\-  the  lawmaker.  ( )n  the  con- 
trary, the  act  l)ears  every  evidence  that  it  was  intended  to  provide 
a  securit\-  for  laborers  and  material  men  on  which  they  could  rely 
confidenll}-  for  protection,  imless  they  saw  lit,  by  their  own  deal- 
ings with  the  contractor,  to  relin(|nish  the  benefit  of  the  security. 
We  are  confirmed  in  these  views  1)}-  the  following  authorities: 
De7^'cy  V.  Stale  ()i  Ind.  173;  Coii'i.  v.  State.  125  Ind.  514,  25  N. 
E.  443;  Doll  V.  Cniuic,  41  Neb.  655,  59  N.  W.  806;  Kaiifiiiaiiii  v. 
Cooper,  46  Neb.  644,  65  N.  W.  796;  Steffes  v.  Lcnike.  40  Minn. 
27,  41  N.  W.  302.  The  first  two  of  these  cases  are  ver\-  much 
in  point.  P)onds  were  given  to  the  state  of  Indiana  as  ol)ligee  for 
the  doing  of  public  work,  in  ])ursuance  of  a  statute  of  that  state, 
which  bonds  contained  conditions  requiring — h^irst,  the  faithful 
performance  anfl  execution  of  the  work  undertaken  by  the  con- 
tractor; atid.  second,  the  prompt  ])a\-ment  by  the  contractor  of 
all  debts  in.curred  by  him  in  the  prosecution  of  the  work  for  labor 
and  materials  supplied  by  third  ])arties.  Jt  was  held,  in  sub- 
stance, that  for  any  breach  of  the  second  condition  of  the  bond  by 
the  contractor  the  right  of  action  was  in  the  laborer  or  the  mate- 
rial man,  and -that  such  right  of  action  could  not  be  defeated  or 
prejudiced  by  any  act  done  by  the  obligee  in  the  bond  after  the 
bond  had  been   taken  and   approved.     It   was  accordingly   ruled 


GRIFFITH    VS.    RUNDLE.  58 

that  changes  made  in  the  contract  1\\-  the  parties  thereto,  to  wit, 
the  contractor  and  the  pubHc  authorities,  after  the  bonds  had  been 
executed  and  accepted,  would  not  deprive  material  men  of  their 
right  to  recover  against  the  sureties  in  the  bond.  It  resultsi  from 
what  has  been  said  that  the  judgment  of  the  circuit  court  was 
erroneous  upon  the  facts  found  by  that  court,  and  should  he 
reversed.  It  is  so  ordered,  and  that  the  case  be  remanded  for  a 
new  trial. 


Griffith  ct  al.  vs.  Rundlf  ct  al.   (1900). 
23  Wash.  4S3:5.S  L.  R.  A.  381  ;  63  P.  199. 

Appeal  by  defendants  from  a  judgment  of  the  Superior  Court 
for  Spokane  county  in  favor  of  plaintiffs  in  an  action  brought 
to  hold  sureties  on  a  contractor's  bond  liable  for  unpaid  labor 
and  materials  which  went  into  the  construction  of  the  building. 
Affirmed. 

The  facts  are  stated  in  the  opinion. 

^Messrs.  Henley.  Kellain,  &  Lindslcy  and  A.  G.  Avery,  for 
appellants. 

Messrs.  Le^^'is  &  Lei^'is,  for  respondents. 

Reavis.  J.,  delivered  the  opinion  of  the  court : 
In  July,  1897,  defendant  Rundle  entered  into  a  contract  with 
the  United  States  for  the  construction  of  certain  buildings  at  the 
army  post  near  Spokane.  At  the  time  the  contract  was  executed, 
a  bond  w^as  duly  executed  in  accordance  with  the  provisions  of  the 
act  of  Congress  approved  August  13,  1894  (28  Stat,  at  L.  p.  278, 
chap.  280).  The  law  is  entitled  '"An  Act  for  the  Protection  of 
Persons  Furnishing  Materials  and  Labor  for  the  Construction  of 
Public  Works."  Its  provisions  are  substantially  that  any  person 
entering  into  a  formal  contract  with  the  United  States  for  the 
construction  of  any  public  building  shall  be  required,  before  com- 
mencing, to  execute  the  usual  penal  bond  with  good  and  sufficient 
sureties,  with  the  additional  obligations  that  the  contractor  shall 
promptlv  make  payments  to  all  persons  supplying  him  labor  and 
materials  in  the  prosecution  of  the  work  provided  for  in  the  con- 
tract ;  that  any  persons  performing  labor  or  furnishing  materials 


54  GUARANTY    AND    SURETYSHIP. 

for  such  work  shall  be  furnished  on  application  Avith  a  certified 
copy  of  the  contract  and  bond  upon  which  the  person  supplying 
labor  and  materials  shall  have  a  right  of  action,  and  be  authorized 
to  bring  suit  in  the  name  of  the  United  States  against  the  con- 
tractor and  sureties,  provided  that  such  action  shall  involve  the 
United  States  in  no  expense.  The  defendants  Henley  and  Snod- 
grass  were  sureties  upon  the  bond,  the  penal  sum  of  which  was 
$10,000.  While  the  contractor,  Rundle,  was  engaged  in  the  con- 
struction of  the  buildings  under  his  contract,  materials  were  fur- 
nished by  plaintiffs  to  the  contractor,  and  used  by  him  in  the  work 
of  construction.  Subsequently,  and  while  the  Iniildings  were  but 
partially  completed,  the  United  States,  in  the  exercise  of  the  right 
reserved  in  the  contract,  took  the  work  out  of  the  hands  of  Rundle, 
and  at  the  same  time  notified  the  sureties,  Henley  and  Snodgrass, 
of  its  action.  Thereupon  the  sureties  took  up  the  work  of  con- 
struction, and  completed  the  buildings -according  to  Rundle's  con- 
tract, and  the  United  States  accepted  their  work  as  full  perform- 
ance of  the  contract.  For  defense  to  the  action,  after  some  denials, 
the  sureties  set  up  the  fact  that  Rundle  did  not  complete  the  con- 
tract, but  the  sureties,  under  its  terms,  made  full  perfomiance, 
which  was  duly  accepted  by  the  United  States,  and  that  in  their 
completion  of  the  contract  they  were  necessarily  comi)elled  to 
expend  sums  in  excess  of  $10,000,  the  amount  of  the  ])enalty 
in  the  bond. 

I.  The  several  assignments  of  error  made  by  the  appellants 
mav  be  grouped  together,  and  stated  as  the  refusal  of  the  superior 
court  to  admit  testimony  under  the  affirmative  defense  set  forth 
in  the  answer.  The  court  excluded  any  evidence  with  reference 
to  the  United  States  having  demanded  of  the  sureties  the  per- 
formance of  the  contract  or  the  payment  of  damages.  It  is  main- 
tained by  counsel  for  appellants  that  the  limit  of  the  liability  of 
the  sureties  was  the  penalty  stated  in  the  bond,  $10,000 ;  that,  if 
the  sureties  had  not  undertaken  the  performance  of  the  contract 
of  their  principal,  the  entire  damages  to  both  the  government 
and  the  res])ondents  and  all  of  the  other  claimants  for  labor  and 
materials  would  have  been  liquidated  by  the  payment  of  $10,000; 
that  the  fact  that  the  sureties  necessarily  expended  more  than  that 
sum  in  the  completion  of  the  contract,  and  over  the  contract  price, 
relieves  them  from  further  liability.  It  is  also  maintained  that, 
if  the  contract  had  not  been  completed,  the  government  is  a  pre- 
ferred creditor,  and  its  claim  would  exhaust  the  penalty,  and  there 


GRIFFITH    VS.    RUNDI.F.  55 

would  be  no  funds  left  for  the  satisfaction  of  plaintiffs  and  other 
claimants  of  like  character;  and  counsel  maintain  that  it  is  neces- 
sar\'  to  detemiine  the  question  of  priority  of  rights  as  between 
the  government  and  these  claimants.  In  a  case  involving  these 
facts, — United  States  use  of  Fidelity  Nat.  Bank  v.  Rundle, — in 
the  United  States  circuit  court,  judgment  was  entered  in  con- 
formity with  the  contention  of  counsel  here.  But  the  cause  was 
afterwards  reversed  by  the  United  States  circuit  court  of  appeals 
(40  C.  C.  A.  450,  100  Fed.  400),  and  the  appellate  court  observed: 
"The  undisputed  facts  of  the  present  case  are  such  that  it  is  not 
necessary  to  consider  the  question  presented  in  the  court  below, 
and  argued  here,  whether  if  the  United  States  had  any  cause  of 
action  upon  the  bond  in  suit,  its  claim  should  l^e  preferred  to  that 
of  the  laborers  and  material  men  ;  for,  as  has  already  been  observed, 
the  United  States  received  full  performance  of  the  contract,  and 
therefore  has  no  cause  of  complaint."  In  the  case  of  United  States 
use  of  Anniston  Pipe  &  Foundry  Co.  v.  National  Surety  Co.,  34 
C.  C.  A.  526,  92  Fed.  549,  such  a  bond  was  under  consideration 
by  the  court,  and  it  was  there  adjudged  that  the  bond  was  intended 
to  perform  a  double  function :  First,  to  secure  the  faithful  per- 
formance of  the  contract  to  the  government ;  and,  second,  to  pro- 
tect third  persons  from  whom  the  contractor  might  obtain  labor 
or  materials  in  the  prosecution  of  the  work.  In  its  second  aspect, 
the  bond,  by  virtue  of  the  statute,  contains  a  separate  and  distinct 
agreement  between  the  obligors  and  such  third  persons  as  to  which 
the  agencv  of  the  government  ceases  when  the  bond  is  given  and 
approved,  and  subsequent  changes  in  the  contract,  agreed  upon 
between  the  government  and  the  contractor,  though  without  the 
knowledge  or  consent  of  the  surety,  will  not  release  the  surety 
from  liability  to  persons  who  supply  labor  or  materials  thereunder. 
The  court  observed  of  the  statute  under  which  the  bond  is  exe- 
cuted: "It  is  also  noticeable  that  in  its  title  the  act  professes  to  be 
one  for  the  benefit  'of  persons  furnishing  materials  and  labor,' 
and  that  in  the  body  of  the  act  the  form  of  the  condition  to  be 
inserted  in  the  bond  for  the  benefit  of  the  United  States  is  not  in 
terms  prescribed,  the  only  provision  in  that  regard  being  that  the 
bond  shall  be  'the  usual  penal  bond :'  meaning,  evidently,  such  an 
obligation  for  the  government's  own  protection  as  it  had  long 
been  in  the  habit  of  exacting  from  those  with  whom  contracts  were 
made  for  the  doing  of  public  work.  On  the  other  hand,  the  con- 
dition for  the  benefit  of  persons  who  might  furnish  materials  or 


5(5  GUARANTY    AXn    SI'R1:T'S'SMIP. 

labor  is  carefully  prcscriljod.  CJ)bviously,  therefore,  Congress  in- 
tended to  afford  full  protection  to  all  ])ersons  who  supplied  mate- 
rials of  labor  in  the  construction  of  ])ul)lic  buildings  or  other 
public  works,  inasnnich  as  such  persons  could  claim  no  lien  thereon, 
whatever  the  local  law  might  be,  for  the  labor  and  materials  so 
supplied.  There  was  no  occasion  for  legislation  on  the  subject  to 
which  the  act  relates,  except  for  the  protection  of  those  who  might 
furtiish  materials  or  labor  to  persons  having  contracts  with  the 
government.  *  *  *  \'iewed  in  its  latter  aspect,  the  l)ond,  l)y  virtue 
of  the  operation  of  the  statute,  contains  an  agreement  between  the 
obligors  iherein  and  such  third  ])arlies  that  they  shall  be  ])aid 
for  whatcNcr  labor  or  materials  they  may  supply  to  enal)le  the 
principal  in  the  l)ond  to  execute  his  contract  with  the  United 
States.  The  two  agreements  which  the  bond  contains — the  one 
for  the  benefit  of  the  government,  and  the  one  for  the  benefit  of 
third  person.s — are  as  distinct  as  if  they  were  contained  in  sepa- 
rate instruments,  the  government's  name  lieing  used  as  obligee  in 
the  latter  agreement  merely  as  a  matter  of  convenience."  in  the 
case  of  Dcwcy  v.  State  ex  rcl.  McCollitin.  ()\  Ind.  173,  it  was  sub- 
stantially held  that  for  anv  ])reacli  of  the  sec(jnd  condition  of  such 
a  bond  1)\  the  contractor  the  right  of  action  was  in  the  laborer 
or  the  material  man.  and  that  such  right  of  action  could  not  be 
defeated  or  abridged  by  anv  act  done  by  the  obligee  in  the  bond 
after  the  bond  had  ])een  taken  and  approved;  and  it  was  ruled 
that  changes  made  in  the  contract  bv  the  parties  thereto — that  is, 
the  contractor  and  the  public  authorities — after  the  bonds  had  been 
accepted  would  not  deprive  material  men  of  their  rights  to  recover 
against  sureties  in  the  bond.  To  the  same  eff'ect  is  Coiiii  v. 
State  ex  rel.  Stiilsiiiaii.  125  Ind.  514.  25  X.  V..  443.  and  the  same 
principle  is  affirmed  in  Poll  v.  Cntiiic,  41  Xeb.  655,  59  N.  W.  806; 
Kanfmaiui  v.  Coiif^cr.  46  .Xeb.  044.  65  X.  W.  796;  Steffes  v. 
Le)iike,  40  Minn.  27,  41  .X.  \V.  302.  The  practical  eff'ect  of  the 
statute,  and  others  of  similar  character  in  a  number  of  the  states, 
seems  to  be  to  confer  a  special  lien  in  fa\'or  of  such  persous  who 
furnish  labor  and  material,  and  to  su])stitute  the  bond  in  ])lace 
of  the  public  building  as  a  thing  u])on  which  the  lien  is  to  be 
charged.  Such  liens  evidently  appear,  from  an  uisi)c;:tion  of  the 
current  legislation,  to  be  favored,  and  the  courts  have  usually 
adopted  a  liberal  rule  of  constructitMi  in  their  enforcement. 

2.   It  is  pertinent  to  suggest  that  in  the  ]>erformance  of  the 
unfinished  contract  by  the  sureties,  if  the}-  had  expended  less  than 


UNION    BANK   \'S.    COSTKR. 


57 


the  amount  to  be  paid  by  the  government  on  the  completion  of  tlie 
contract,  the  excess  or  profit  would  have  belonged  to  them,  and, 
if  they  undertook  the  completion  of  the  contract  and  sustained  a 
loss,  it  would  seem  that  it  should  fall  upon  them.  As  sureties 
under  the  terms  of  the  contract,  they  might  elect  to  complete  it 
upon  default  of  their  principal,  but  such  completion  was  not  the 
full  performance  of  the  contract  by  the  principal  himself.  It  sat- 
isfied the  sureties'  contract  with  the  government,  but,  as  observed 
by  the  circuit  court  of  appeals  in  United  States  use  of  Fidelity 
Nat.  Bank  v.  Riindle,  40  C.  C.  A.  450,  100  Fed.  400,  the  United 
States  is  not  a  claimant  here,  and  the  question  of  priority  of  claims 
to  the  amount  due  from  the  sureties  under  the  terms  of  the  bond 
is  not  involved  in  this  case. 

The  judgment  of  the  Superior  Court  must  be  affirmed. 

Dunbar,  Ch.  T-,  and  Fullerton  and  Anders,  JJ.,  concur. 


Union  Bank  of  Louisiana  z's.  Coster's  Executors   (1850). 

3  N.  Y.  203. 

On  the  29th  of  Alay.  1841.  Heckscher  &  Coster,  merchants 
of  the  city  of  New  York,  executed  and  sent  to  Kohn,  Daron  & 
Co.,  merchants  in  New  Orleans,  a  letter  of  credit  as  follows: 

''New  York,  29  May,  1841. 
"Sir:   We  hereb}^  agree   to  accept  and  pay  at  maturity  any   draft   or 
drafts  on  us  at  sixty  days'  sight,  issued  by  ^Messrs.  Kohn,  Daron  &  Co.  of 
your   city,  to  the  extent  of   twenty-five  thousand   dollars,   and   negotiated 
through  your  bank.     We  are  respectfully,  sir,  your  obd't  serv'ts, 

"Heckscher  &  Coster." 

At  the  foot  of  the  letter  of  credit  was  a  guaranty  executed  at 
the  same  time  by  John  G.  Coster,  as  follows : 

"I    hereby   guarantee   the   due   acceptance   and   payment   of   any   draft 

issued  in  pursuance  of  the  above  credit. 

"John  G.  Co.-^ter." 

On  the  faith  of  the  above  letter  of  credit  and  guaranty,  the 
Union  Bank  of  Louisiana,  in  January,  1842,  purchased  two  drafts 
drawn  by  Kohn,  Daron  &  Co.  on  Heckscher  &  Coster,  amounting 
to  about  $9,000.  which  were  accepted  and  paid  by  the  latter  accord- 


58  GUARANTY    AND    SURI-:TYS1  1 1 1'. 

ing  to  their  agreement.  On  the  14th  of  February.  1842,  the  bank, 
under  the  same  letter  of  credit.  ])urcliase<l  anollier  draft  for  $4,000, 
at  sixty  days'  sight,  drawn  by  and  upon  tlic  same  parties;  and  on 
the  26th  of  that  month  this  draft  was  presented  to  Heckscher  & 
Coster,  in  New  York,  for  acceptance,  which  they  refused.  On 
the  9th  of  April,  1842,  the  attorney  for  the  Union  Bank  gave 
notice  to  John  G.  Coster  that  he  had  received  the  draft  for  col- 
lection, and  on  the  2d  of  May,  J  842,  formal  notice  of  the  protest 
of  the  draft  fur  ufvn-payment  was  served  on  Mr.  Coster.  In 
August,  1844,  John  G.  Coster  died,  and  the  Union  Bank  subse- 
quently brought  this  suit  in  the  superior  court  of  the  city  of  New 
York,  against  his  executors,  upon  the  guaranty  above  set  forth, 
for  the  purpose  of  recovering  the  amount  of  the  draft.  On  the 
trial,  in  addition  to  the  facts  already  stated,  it  appeared  that  prior 
to  any  of  the  above  mentioned  transactions  with  the  Union  Bank, 
the  said  letter  of  credit  and  guaranty  had  been  held  by  the  Cily 
Bank  of  New^  Orleans,  which,  upon  the  faith  thereof,  in  Decem- 
ber, 1841,  had  purchased  a  draft  of  $10,000  drawn  by  Kolin, 
Daron  &  Co.  uix)n  Heckscher  &  Coster.  The  letter  and  guaranty 
were  not  addressed  to  aiu'  particular  jicrson  or  bank. 

IViii.  M.  livarts,  for  appellants. 

B.  IV.  Bouncy,  for  respondents. 

Pratt,  J.,  delivered  the  opinion  of  the  court.  Contracts  of 
guaranty  differ  from  other  ordinary  simple  contracts  only  in  the 
nature  of  the  evidence  required  to  establish  tlieir  validity.  The 
statute  requires  every  special  promise  to  answer  for  the  debt, 
default  or  miscarriage  of  another,  to  be  in  writing  subscribed 
by  the  party  to  be  charged  thereby,  and  expressing  therein  the 
consideration;  and  no  parol  evidence  will  be  allowed  as  a  sub- 
stitute for  these  requirements  of  the  statute.  But  in  other  respects 
the  same  rules  of  construction  and  evidence  apply  to  contracts  of 
this  character  which  apply  to  other  ordinary  contracts.  Hence 
the  consideration  which  will  su])port  a  contract  of  this  character, 
as  in  other  cases,  may  consist  in  some  benefit  to  the  promisor,  or 
some  other  person  at  his  request,  or  some  trouble  or  detriment  to 
the  promisee.  (20  Wend.  184,  201;  Theobald  on  Pr.  &  Surety, 
3,  4;  2  H.  Bl.  312.)  Nor  is  any  particular  form  of  words  neces- 
sary to  be  used  for  expressing  the  consideration ;  but  it  is  enough 
if  from  the  whole  instrument  the  consideration   expressly  or  by 


UNION   BANK  VS.    COSTER. 


59 


necessary  inference  appears ;  so  that  it  be  clear  that  such  and  no 
other  was  the  consideration  upon  which  the  promise  was  made. 
(24  Wend.  35;  21  id.  628;  4  Hill,  200;  8  Ad.  &  El.  846;  5  Barn. 
&  Ad.  1 109.)  And  the  rule  allowing  two  or  more  instruments 
given  at  the  same  time  and  relating  to  the  same  subject  matter  to 
be  construed  together  as  one  instrument,  applies  also  to  this  class 
of  contracts ;  so  that  when  a  guaranty  is  given  at  the  same  time 
with  the  principal  contract  and  fonns  a  part  of  the  entire  transac- 
tion, if  the  consideration  be  stated  in  the  principal  contract,  though 
none  be  stated  in  the  guaranty,  it  will  suffice.  8  John.  35  ;  y 
Wend.  218;  18  id.  114.  So  also  as  in  other  cases,  parol  evidence 
of  the  circumstances  under  which  the  contract  was  made  may  be 
given,  to  aid  the  court  in  giving  a  true  construction  to  ambiguous 
terms  therein,  or  to  shov/  that  separate  contracts  relate  to  the  same 
subject  matter. 

It  should  also  be  observed  here,  that  our  statute  in  terms  only 
requires  the  contract  to  express  therein  what  it  had  been  well 
settled  the  statute  of  Elizabeth  required  it  to  contain,  and  the  same 
rules  of  construction  should  therefore  be  applied  in  cases  under 
both  statutes.     24  Wend.  35. 

With  these  observations  in  relation  to  the  law  governing  cases 
of  this  kind,  we  come  to  the  consideration  of  the  contract  in  ques- 
tion. 

The  letter  of  credit  of  Heckscher  &  Coster  is  an  original  un- 
dertaking on  the  face  of  it  to  accept  any  drafts  to  be  drawn  upon 
them  at  sixty  days  by  Kohn,  Daron  &  Co.  to  the  extent  of  $25,000, 
and  negotiated  by  the  bank  to  v/hom  it  is  addressed.  The  con- 
sideration of  their  undertaking  appears  very  plainly  from  the 
instrument.  It  is  an  open  proposition  to  the  bank  to  which  it  is 
addressed,  that  if  it  will  purchase  the  drafts  drawn  by  Kohn, 
Daron  &  Co.  they  will  accept  and  pay  the  same.  As  soon  there- 
fore as  the  bank  complied  with  the  proposition  the  contract  was 
closed,  and  the  rights  and  liabilities  of  the  parties  became  fixed. 
Upon  this  part  of  the  contract  there  can  be  no  question  that  a  suffi- 
cient consideration  appears  upon  the  face  of  the  contract  to 
uphold  it.  But  it  requires  no  greater  or  different  consideration 
to  support  a  guaranty  than  to  support  an  original  promise.  The 
only  differenc'e  in  the  two  cases  consists  in  the  former  requiring 
the  consideration  to  appear  upon  the  contract  itself,  whereas  the 
consideration  to  support  the  latter  may  be  proved  by  parol.  The 
question  therefore  in  this  case  is  whether  the  consideration  of  the 


60  GUAKA.NTY    AND    SURI:TYSII1  F. 

undcrtakino;  of  the  defendants'  testator  appears  upon  the  instru- 
ment itself,  or  ratlier  whether  the  two  instruments  may  he  read 
together  so  that  the  same  consideratiDU  sliaU  support  hoth. 

The  i^uarantv  is  wiihuut  date  and  at  the  font  of  the  letter 
of  eredit.  In(lei)endcnt  of  die  ])arnl  tesliiuony  it  should  he  <leenied 
to  have  heen  made  at  the  same  time.  It  is  addressed  to  the  same 
person  an<l  relates  to  the  same  suhjecl  matter.  It  should  there- 
fore, within  every  rule  of  construction,  he  deemed  i)art  of  the 
same  transaction,  and  the  two  instruments  should  he  read  together 
as  one  contract.  The  two  would  read  thus:  "In  consideration 
that  \-ou,  the  I'nion  r.ank  of  Louisiana,  will  ])urchase  any  draft 
or  drafts  to  he  issued  1)\-  Kohn,  Daron  &  Co.  upon  Heckscher  & 
Coster,  at  sixty  days,  not  exceeding  $25,000,  we  the  said  Heck- 
scher &  Coster  will  accept  and  i)ay  the  same;  and  I  the  said  John 
G.  Coster  agree  that  lieck.scher  «!v  Coster  shall  acce])t  and  ])ay 
the  same."  Now  it  seems  to  me  clear  that  such  is  the  fair  read- 
ing of  the  two  contracts  taken  together;  and  although  the  con- 
tract of  John  (i.  Coster  may  he  deemed  collateral,  yet  had  the  two 
hcen  drawn  in  the  ahove  form  no  (|uestion  could  have  heen  raised 
ui)on  the  statute  of  frauds.  lUit  what  may  he  fairly  inferred  from 
the  terms  of  a  contract  should  he  i-onsidered,  for  the  purpose  of 
giving  it  elTect.  as  contained  in  it ;  and  diis  rule  applies  as  well 
to  collateral  as  to  original  undertakings.      ;  Hill,  147. 

There  is  a  wide  difference  hetween  the  guaranty  of  an  exist- 
ing deht  and  the  guaranty  of  a  deht  to  he  contracted  u])on  the 
credit  of  the  guaranty.  It  is  the  dilTercnce  hetween  a  past  and 
future  consideration.  A  past  ct)nsideration,  unless  done  at  the 
request  of  the  promisor,  is  not  sufficient  to  sup]:)ort  any  ])rom- 
ise.  r.ut  a  i)romise  to  do  an  act  in  consideration  of  some  act  to 
he  done  hy  the  jinimisee  im])lies  a  request,  and  a  com])liance 
on  the  part  of  the  l.Uter  closes  the  contract  and  makes  it  hind- 
ing.  And  although  it  may  he  necessary  from  the  nature  of 
the  case  to  ]:)rove  ])erformance  hy  ])arol,  yet  such  evidence  is  no 
violation  of  the  statute  ri'ipiiring  the  consideration  to  he  in  writ- 
ing. Tlu'  consideration  of  the  ])roinise  is  expressed,  ami  the 
])arol  c\-idence  is  oulv  used  to  show,  not  wdiat  the  consideration 
is,  hut  that  the  act  which  constitutes  that  consideration  has  heen 
performed.  Any  other  rule  would  recjuire  every  person  to  whom 
a  letter  of  credit  is  directed  to  accejit  the  same  in  writing  hefore 
the  drawer  wmild  he  homid.  l'"or  instance,  a  letter  drawn  in  the 
countrv  and  addressed   to  a  merchani   in   the   city,   guaranteeing 


UNION    T5.\NK   VS.    COSTKR.  61 

the  responsibility  of  the  person  for  whose  l)enefit  the  same  was 
drawn  for  a  i^iven  bih  of  i^oods  to  be  sold  to  him,  would  require 
a  written  acceptance  by  the  city  merchant  before  it  would  be  bind- 
ing upon  the  drawer.  No  such  strict  rule  can  be  found  sup- 
ported by  anv  adjudication.  1  am  therefore  satisfied  that  the 
consideration  of  the  guaranty  in  the  case  at  bar  sufficiently  appears 
in  the  contract,  and  that  the  same  was  valid  and  Ijinding  upon 
the  defendants"  testator.  1  have  not  been  able  to  find  a  case  in 
our  own  or  the  English  courts  which  would  conflict  with  the  doc- 
trine aliove  advanced;  but  on  the  contrary,  the  l)ooks  are  fuh 
of  cases  similar  in  their  circumstances  to  this  case,  where  the 
guaranty  has  been  sustained.  8  John.  35;  it  id.  221  ;  10  Wend. 
218;  S.  C.  in  error,  13  id.  i  14:  12  id.  218:  24  id.  35:  4  Hill,  200; 
4  Denio,  559;  I  Ad.  &  E.  57 ;  5  Bligh's  N.  R.  i  ;  7  Mees.  &  Wels. 
410;  9  East,  348;  I  Camp.  242;  3  IJrod.  &  Bing.  211  ;  4  C.  &  P. 
N.  P.  59 ;  8  Dowl.  &  Ryl.  62. 

The  next  question  raised  in  the  case  is  as  to  notice  of  ac- 
ceptance. We  must  hold  the  law  to  be  settled  in  this  state  that 
where  the  guarant}'  is  absolute  no  notice  of  acceptance  is  neces- 
sary. Judge  Cowen  in  Douglass  v.  Hozvlaiid  (24  Wend.  35), 
and  Judge  Bronson,  in  Siuitli  v.  Danii  (6  Hill,  543),  exammea 
the  cases  at  length  upon  this  question,  and  they  showed  conclu- 
sivelv  that  by  th,e  common  law  no  notice  of  the  acceptance  of  any 
contract  was  necessary  to  make  it  binding,  unless  it  be  made  a 
condition  of  the  contract  itself,  and  that  contracts  of  guaranty 
do  not  difi'er  in  that  respect  from  other  contracts.  In  this  case  the 
only  condition  of  Coster's  undertaking  was  that  the  liank  should 
purchase  the  drafts  to  be  issued  by  Kohn,  Daron  &  Co.,  and  upon 
complying  with  that  condition  the  rights  of  the  parties  became 
fixed,  and  the  contract  binding.  There  is  nothing  in  the  contract 
from  which  we  can  infer  that  it  was  the  intention  of  the  parties 
that  notice  should  be  given  in  order  to  fix  the  guarantor.  No 
more  is  required  to  make  tlie  guarantor  liable  than  to  make 
Heckscher  &  Coster,  and  the  only  notice  to  them  necessary  was 
the  presentment  of  the  drafts  for  their  acceptance  within  a  rea- 
sonable time.  Alien  v.  Righluicrc.  20  John.  365  :  Clark  v.  B>ii-- 
dett.  2  Hall,  197;  Cro.  Jac.  287,  685;  2  Salk.  457;  \'in.  .\b. 
Notice,  A.  3 ;  Com.  Dig.  Plead.  C.  75  ;  2  Chitty,  403. 

As  to  notice  of  non-acceptance  and  non-payment  of  the  bills 
by  the  drawees,  that  can  only  involve  the  subject  of  laches  on  the 
part  of  the  holders  of  the  drafts,  and  all  the  cases,  both  in  Eng- 


4)2  C.UAUAXTV    AND    SL' KKTVSII I  T. 

land  aiul  in  this  country,  cuncur  in  holding"  that  this  detcnsc  can 
only  be  set  up  to  an  action  against  the  surety  in  cases  where  he 
has  suffered  damage  thereby,  and  then  only  to  the  extent  of 
such  damage.  7  Peters,  117;  12  id.  497;  i  ^lason,  323,  368; 
I  Story,  22;  13  Conn.  28;  5  Man.  &  Granj  559;  13  Mees.  & 
W'els.  452;  3  Kent's  Com.  122.  if,  therefore,  it  were  neces- 
sar\-  in  this  case  to  give  any  notice,  no  evidence  has  been  given 
showing  that  the  defendants,  or  the  guarantor,  suffered  any  loss 
in  consequence  of  tlie  want  of  such  notice. 

The  onl\-  remaining  question,  therefore,  worthy  of  consid- 
eration in  this  case,  arises  out  of  the  fact  that  another  bank  had 
previously  purchased  drafts  drawn  in  pursuance  of  the  letter  of 
credit  and  guaranty.  It  is  claimed  that  by  such  purchase  the 
contract  became  a  fixed  and  binding  contract  between  such  bank 
and  tliL-  ])r()misor.  and  thereby  lost  its  negotiable  character,  and 
became  located  so  that  no  other  person  or  l)ank  could  pvirchase 
drafts  upon  the  credit  of  it. 

The  guaranty,  in  this  case,  was  manifestly  intended  to  accom- 
pany the  letter  of  credit,  and  is  subject,  in  this  respect,  to  the 
same  construction.  If,  therefore,  it  was  competent  for  Kohn, 
Daron  &  Co.  to  draw  several  drafts  not  exceeding  the  limit  in  the 
bill  of  credit  specified,  and  to  negotiate  them  at  dift'erent  banks, 
and  lleckscher  &  Coster  would  be  bound  by  their  letter  of  credit 
to  accept  and  pay  them,  the  guarantor  would  also  be  liable  to  the 
same  extent.  As  a  general  rule  the  surety  is  liable  to  the  same 
extent  as  the  principal,  unless  he  expressly  limits  his  liability. 
(Theobold  on  Prin.  and  Surety,  46.)  It  therefore  only  becomes 
necessary  to  examine  the  letter  of  credit,  and  ascertain  whether 
it  was  intended  to  be  limited  to  one  particular  bank,  or  is  a  general 
letter  of  credit  to  any  and  all  persons  who  may  advance  money 
uix)n  it.  It  is  somewhat  singular  that  we  find  so  few  adjudica- 
tions in  our  courts  upon  a  class  of  commercial  instruments  which 
enter  so  largelv  into  the  commerce  and  business  of  this  country, 
and  of   the  world. 

In  England  it  seems  to  be  at  this  time  questional)le  whether 
a  partv  who  advances  money  upon  a  general  letter  of  credit  can 
sustain  an  action  upon  it.  Russeil  ct  al.  v.  Wiggins,  2  Story, 
214:  Bank  of  Ireland  v.  Archer,  2  Mees.  &  Welsby,  383.  The 
reason  assigned  is  that  there  is  no  privity  of  contract  between 
them.  It  is  there  assumed  that  it  is  only  a  contract  between  the 
-drawer  of  the  letter  and  the  person  for  whose  benefit  it  is  drawn. 


UNION    HANK    VS.    COSTER.  63 

But  ill  this  country  the  contrary  doctrine  is  well  settled.  Letters 
of  credit  are  of  two  kinds,  general  and  special.  x\  special  letter 
of  credit  is  addressed  to  a  particular  individual  by  name,  and  is 
confined  to  him,  and  gives  no  other  person  a  right  to  act  upon  it. 
A  general,  letter,  on  the  contrary,  is  addressed  to  any  and  every 
person,  and  therefore  gives  any  person  to  whom  it  may  be  shown 
authority  to  advance  upon  its  credit.  A  privity  of  contract  springs 
up  between  him  and  the  drawer  of  the  letter,  and  it  becomes  in 
legal  effect  the  same  as  if  addressed  to  him  by  name.  Russell  v. 
Wiggins,  2  Story's  Rep.  214;  12  Mass.  154;  2  Metcalf,  381;  12 
Wend.  393;  12  Peters,  207;  Burkhead  v.  Brozvii,  5  Hill,  641; 
Story  on  Bills ;  See  Beames'  Lex.  Mer.  444. 

But  these  general  letters  of  credit  may  be  subdivided  into 
two  kinds,  those  that  contemplate  a  single  transaction,  and  those 
that  contemplate  an  open  and  continued  credit,  embracing  sev- 
eral transactions.  In  the  latter  case  they  are  not  generally  con- 
fined to  transactions  with  a  single  individual,  but  if  the  nature 
of  the  business  which  the  letter  of  credit  was  intended  to  facilitate, 
requires  it,  dift'erent  individuals  are  authorized  tO'  make  advances 
upon  it,  and  it  then  becomes  a  several  contract  with  each  indi- 
vidual to  the  amount  advanced  by  him.  Thus  a  general  letter  of 
credit  may  be  issued  to  a  person  to  enable  him  to  purchase  goods 
in  the  city  of  New  York,  for  a  country  store.  The  very  nature 
of  the  business  requires  him  to  deal  with  different  individuals 
and  houses  in  order  to  obtain  the  necessary  assortment.  It  has 
never,  as  I  am  aware,  been  questioned  that  the  guarantor  might 
be  bound  to  several  persons  who  should  furnish  goods  upon 
the  credit  of  the  letter. 

So  letters  are  issued  by  commission  houses  in  the  city,  to 
enable  persons  to  purchase  produce  in  the  western  states.  The 
money  is  obtained  from  the  local  banks  in  those  states  by  drafts 
drawn  upon  those  houses,  and  upon  the  faith  of  the  letters  of 
credit.  It  may  often  happen  that  a  single  bank  can  not  furnish 
the  requisite  amount,  or  it  may  be  necessary  to  use  money  in 
different  and  distant  localities.  I  am  not  aware  of  any  question 
ever  having  been  raised  as  to  the  authority  of  different  banks 
to  act  upon  the  same  letter  of  credit.  It  is  absolutely  necessary 
that  such  should  be  the  effect  of  them  in  order  to  facilitate  the 
commerce  of  the  country,  and  to  carry  out  the  object  of  the  parties 
in  issuing  the  letters  of  credit.  Bv.rkhcad  v.  Brown.  5  Hill,  641  ; 
2  Story's  Rep.  214. 


64  tUAKAXTV    AND    SI  "UKTVSJ  J  11'. 

Tlic  letter  of  credit  in  this  case  was  evidently  intended  in  be 
sj^eneral :  it  did  not  contemplate  a  single  transaction,  or  draft  for 
the  whole  anionnt.  bnt  several  drafts  limited  in  the  aggregate  to 
twenty-five  thonsand  dollars.  .Mthongh  the  address  "sir,"  and 
"vonr  hank."  is  in  the  singnlar  nnniher,  yet  I  think  it  was  intended 
to  be  nsed  in  a  distrihntive  sense,  and  apply  to  any  hank  or  hanks 
who  should  purchase  the  drafts.  1  can  sec  no  object  which  the 
drawers  should  have  for  limiting  the  party  for  whose  benefit 
the  letter  was  issued  to  a  single  bank.  It  is  said  that  it  would 
enable  them  more  readily  to  revoke  the  authority.  lUu  these  let- 
ters are  not  issued  without  either  undouljted  confidence  in  the 
persons  for  whose  benefit  they  are  drawn,  or  upon  ample  security. 
The  idea  of  giving  notice  of  revocation  to  any  party  but  that  for 
whose  benefit  they  are  drawn,  is  never  entertained  by  the  guaran- 
tors in  cases  of  general  letters.  Wlien  they  wish  to  provide 
for  any  such  contingency  the  letters  are  framed  accordingly.  Again, 
in  this  case  the  parties  themselves  have  treated  this  letter  as  not 
limited  to  a  single  liank,  for  they  accepted  hills  which  had  been 
discounted  by  the  plaintitts. 

I  am,  therefore,  satisfied  llial  the  i)laintirfs  were  authorized 
to  purchase  l)ills  upon  the  faith  of  the  letter  and  accom])anying 
guaranty,  and  that  the  previous  jmrchase  of  bills  by  another  bank 
is  no  defense. 

\Miether  the  letters  had  been  revoked  with  the  knowledge 
of  the  i)laintififs  before  the  draft  was  discounted  by  them,  was  a 
question  of  fact  for  the  ju.rv.  It  would  ckarlv  constitute  no  de- 
fense unless  th.e  plaintiffs  had  notice  of  it.  The  judgment  of 
the  superior  court  must  therefore  be  at^rmed  with  costs. 

Judgment   affirmed. 


Thi-:   EvANSviLLi-:   Nationai    Baxk   of   Evansvili.k.    Ixdi.wa, 
Respondent,  z'S.  Adolpii  Kaii'maxx  ct  ciL,  Appellants  (  1883). 

03  X.  >'.  273. 

Ai'i'ivM,  from  order  of  the  ( leneral  Term  of  the  Supreme 
Court,  in  the  first  judicial  department,  made  iMay  25,  1881.  which 
reversed  a  judgment  in  favor  of  defendants,  entered  upon  a  report 
of  a  referee.      Reported  below,  2.\  llun.  612. 


EVANSVILLE    BANK    VS.    KAUFMANN.  65 

This  action  was  broujjht  to  recover  the  amount  of  two  drafts 
drawn  by  Bingham  Bros.,  of  Evansville,  Ind.,  on  A.  Feigelstock, 
of  the  city  of  New  York,  which  were  discotmted  by  plaintiff  at 
Evansville,  and  forwardetl  to  New  York  for  acceptance  and  pay- 
ment by  the  drawee,  by  whom  they  were  dishonored. 

Defendants  were  sought  to  be  made  liable  under  the  follow- 
ing letter  of  credit,  which  was  delivered,  to  and  left  with  defend- 
ants, and  upon  the  security  of  which  they  discounted  the  paper : 

"New  York,  December  29,  1874. 
"Messrs.  Bingham  Bros.,  Evansville,  Ind. : 

"Dear  Sirs — Any  drafts  that  you  may  draw  on  Mr.  A.  Feigelstock.  of 
our  city,  we  guarantee  to  be  paid  at  maturity. 

''Truly  yours, 

"Kaufmann  &  Blun." 

The  further  facts  appear  in  the  opinion. 

Charles  Edzuard  Souther,  for  appellants. 

E.  B.  Croii'cll  and  Asa  Iglehart,  for  respondents. 

RuGER,  Ch.  J.  Guaranties  are  distinguished  in  the  law  as 
being  either  general  or  special.  Special  guaranties  being  those 
which  operate  in  favor  of  the  particular  persons  only  to  whom 
they  are  addressed,  while  general  guaranties  are  open  for  accept- 
ance by  the  public  generally.  They  are  sometimes  further  classi- 
fied into  those  limited  to  a  single  transaction  and  those  embracing 
continuous  or  successive  dealings.  Gates  v.  McKee,  13  N.  Y. 
232;  Church  V.  Brozvii,  21  id.  329. 

The  liability  of  the  defendants  in  this  case  depends  upon  the 
solution  of  the  question  to  which  of  these  classes  the  guaranty 
in  suit  belongs.  If  it  be  regarded  as  a  general  guaranty,  there 
is  no  just  defense  to  this  action.  If,  however,  it  is  a  mere  special 
guaranty,  although  continuous  in  its  character,  other  C[uestions 
will  arise  for  consideration.  Many  of  the  earlier  cases  arising 
upon  guaranties,  both  here  and  in  England,  were  largely  con- 
trolled by  the  question  of  their  negotiability ;  and  it  was  uniformly 
held  that  no  action  would  lie  at  the  suit  of  an  assignee  ujxDn  a 
special  guaranty  because  no  privity  existed  between  such  assignee 
and  the  guarantor.  Robbitis  v.  Bingham.  4  Johns.  476 ;  Walsh  v. 
Bailie,  10  id.  180;  Chitty  on  Bills,  273,  308  (ed.  1839);  Nezv- 
couib  V.  Clark,  1  Denio,  226 ;  Birckhead  v.  Broivn,  5  Hill,  634. 
This  obstacle  was  removed  in  this  state  by  the  Code  of  Porcedure, 
which  authorized  any  party  acquiring  an  interest  in  a  guaranty 
to  bring  his  action  and  recover  thereon,  provided  a  cause  of  action. 

6 


66  GUARANTY    AND    SURETYSHIP. 

previously  existed  u])on  tlie  contract  in  favor  of  his  assignor. 
Tlie  real  party  in  interest  in  such  contracts  is  now  entitled  to 
maintain  an  action  for  damages  arising  from  a  breach  of  such 
contract  in  his  own  name,  although  he  was  not  originally  privy 
to  it. 

In  other  words  the  same  effect  is  now  given  to  an  equitable 
that  formerly  pertained  to  a  legal  assignment,  and  they  are  now 
both  equally  cognizable  in  a  court  of  law. 

It  follows  that  Bingham  Brothers  could  assign  to  the  plaintiff" 
and  the  latter  recover  upon  any  cause  of  action  accruing  to  them 
under  the  letter  of  credit  ill  question  existing  against  the  defend- 
ants at  the  time  of  the  discount  of  the  drafts  in  suit. 

The  true  distinction  between  general  and  special  guaranties, 
as  contained  in  letters  of  credit,  is  that  upon  the  faith  of  a  general 
guaranty  any  person  is  entitled  to  advance  money,  or  incur  lia- 
bility, upon  complying  with  its  terms,  and  can  recover  thereon  the 
same  as  though  specially  named  therein.  I'liioii  Bank  of  Louisi- 
ana v.  Coster,  3  X.  Y.  203. 

In  the  case  of  a  special  guaranty,  however,  the  liberty  of 
accepting  its  terms  is  confined  to  the  persons  to  whom  it  is  ad- 
dressed, and  no  cause  of  action  can  arise  thereon  except  by  their 
action  in  complying  with  its  conditions. 

Such  a  guaranty  contemplates  a  trust  in  the  person  of  the 
promisee,  and  from  its  ver\'  nature  is  not  assignable  until  a  right 
of  action  has  arisen  thereon,  which  may,  like  any  other  cause  of 
action  arising  upon  contract,  be  then  assigned. 

The  authority  of  the  cases  holding  that  no  privity  exi.':ts 
])etween  the  assignee  of  a  guaranty  and  the  guarantor  sufficient 
to  enable  the  former  to  maintain  an  action  thereon  has  thus 
ceased  by  force  of  the  provisions  of  the  Code. 

Though  this  be  so,  the  common-law  rule  applies  to  contracts 
of  guaranty  as  well  as  to  other  contracts ;  that  a  consideration  is 
necessary  to  render  them  valid ;  and  that,  unless  such  consideration 
be  acknowledged  by  the  contract  itself,  it  is  still  necessary  to 
prove  one  in  order  to  recover  thereon.  Leonard  v.  Vredcnburgh, 
8  Johns.  29;  Bailey  v.  Freeman,  4  id.  280;  Brandt  on  Surety- 
ship, 7. 

It  w-as  formerlv  held  that  such  contracts  were  void  by  the 
statute  of  frauds  unless  their  consideration  was  also  expressed 
u])on  the  face  of  the  instrunuMit  itself.  Ihiioii  Bank  v.  Coster, 
lix'r,  3  N.  Y.  211  ;  Xcwconib  v.  Clark,  i  Denio,  226. 


EVANSVILLE    BANK    VS.    KAUFMANN.  67 

Ikit  this  rule  was  modified  by  other  cases  holding  that  where 
the  nature  of  the  consideration  was  fairly  inferable  from  the  con- 
tract sued  upon,  or  was  contained  in  a  written  instrument  con- 
temporaneously executed  and  forming  a  part  of  the  transaction, 
it  would  satisfy  the  requirement  of  the  statute.  Gates  v.  McKee, 
supra;  Church  v.  Brown,  21  N.  Y.  315  ;  Douglass  v.  Hozvland,  24 
Wend.  35  ;  Leonard  v.  Vredenburgh,  supra;  Rogers  v.  Kneeland, 
10  Wend.  218. 

The  cases  of  Brezvster  v.  Silence  (8  N.  Y.  207)  and  Draper  v. 
Siiozv  (20  id.  331),  holding  a  contrary  doctrine,  have  been  much 
shaken,  as  authority  upon  this  cjuestion,  by  die  later  cases  above 
cited. 

The  statute  of  frauds  was  amended  in  this  State  by  chapter 
464  of  the  Laws  of  1863,  omitting  in  its  re-enactment  the  pro- 
vision requiring  the  consideration  of  a  promise  to  answer  for 
the  debt,  default  or  miscarriage  of  another,  to  be  expressed  in 
the  writing  containing  such  promise. 

The  effect  of  this  amendment  was  to  dispense  with  the  neces- 
sity of  such  statement  in  the  instrument  itself  {Speyers  v.  Lam- 
bert, 6  Abb.  Pr.  [N.  S.]  309),  but  it  left  it  still  indispensable  that 
a  consideration  in  fact  for  the  promise  should  exist  in  order  to 
entitle  the  promisee  to  recover  thereon.     Brandt  on  Suretyship,  90. 

Regarding  this  case,  therefore,  as  unaffected  by  the  questions 
referred  to,  its  solution  seems  to  depend  upon  the  answer  to  be 
made  to  these  two  propositions :  First,  as  to  whether  the  guaranty 
in  question  is  general  or  special ;  and  second,  if  -it  be  found  to  be 
a  special  guaranty,  whether  any  good  cause  of  action  arose  there- 
on in  favor  of  the  persons  to  whom  it  was  addressed,  which  has 
been  assigned  to  the  plaintiff  in  this  action.  Besides  a  considera- 
tion, it  is  essential  that  a  contract  of  this  kind  should  be  between 
proper  parties,  viz. :  a  promisor  or  guarantor ;  a  principal  and  a 
promisee ;  and  it  is  just  as  essential  that  such  contracts  should 
describe  or  refer  to  these  parties  so  as  to  identify  them,  either 
individually  or  as  a  cla<?s. 

It  is  always  competent  for  a  guarantor  to  limit  his  liability, 
either  as  to  time,  amount  or  parties,  by  the  terms'  of  his  contract, 
and  if  any  such  limitation  be  disregarded  by  the  party  who  claims 
under  it  the  guarantor  is  not  bound.  It  follows  that  no  one  can 
accept  its  propositions  or  acquire  any  advantage  therefrom  unless 
he  is  expressly  referred  to  or  necessarily  embraced  in  the  descrip- 
tion of  the  persons  to  v;hom  the  offer  of  guaranty  is  addressed. 


68  GUARANTY    AND    SURRTVSIIIP. 

Kubbiiis  V.  Bingham,  supra;  Union  Bonk  v.  Coster,  supra; 
Church  V.  Brown,  supra:  Walsh  v.  Bailie,  supra;  Dodge  v.  Lean, 
13  Johns.  508;  IJrandt  on  Smxtyship,  88;  Bailey  v.  Ogden,  3 
Johns.  3yc). 

In  tlic  case  of  a  special  gnaiant\  the  consideration  necessary 
to  support  the  ])ronhse  may  he  either  one  furnished  hy  the  prin- 
cipal to  the  guarantor,  or  hy  the  promisee  to  either  the  principal 
or  some  third  per.son,  according  to  the  terms  of  the  guaranty. 

A  general  letter  of  credit  is  addressed  to  and  invites  people 
generally  to  advance  mor.ey,  give  credit,  or  sell  property  in  reliance 
upon  it,  and  when  this  is  done  tlie  contract  is  complete,  and  the 
acceptor  hecomes  a  part}'  t(_)  it  and  may  enforce  it  for  his  own 
henefit. 

In  such  case  the  ])romisee  has,  upon  the  request  of  the  guar- 
antor, furnished  the  consideration  contemplated  hy  the  guaranty 
and  hrought  himself  within  its  terms  and  the  re(|uirements  of 
law.  Union  Bank  v.  Cosier,  supra:  Church  v.  Broicii.  supra; 
Birckhead  v.  Brown,  supra. 

To  come  to  the  case  in  hand  it  will  be  found  that  the  guaranty 
neither  in  its  address  nor  contents  refers  either  directly  or  indi- 
rectly to  any  other  persons  than  tlie  immediate  parties  thereto. 
These  ]jarties  are  Kaufmann  iK:  lllun,  the  guarantors,  Feigelstock, 
the  principal,  and  I'ingham  Bros.,  the  ]iromisees. 

It  has  been  said  t'uii  the  allusion  in  the  letter  to  tlie  word 
"drafts"  imjilies  the  negotiation  of  these  instruments  to  third 
persons.  This  idea  we  think  is  not  necessarily  or  generally  con- 
veyed by  this  exi)ression. 

Drafts,  as  used  in  the  collection  of  debts,  are  not  usually 
negotiable.  The  office  of  a  draft  is  to  collect  for  the  drawer  from 
the  drawee,  residing  in  another  place,  money  to  which  the  former 
may  be  entitled,  either  on  acctjunt  of  balances  due  or  advances 
upon  consignments,  arid  although  they  may  sometimes  be  used 
for  raising  money,  that  is  not  the  necessary  or  ordinary  purpose 
for  whichi  thev  are  em])1oyed. 

We  might,  therefore,  well  hold  that  no  such  doubt  or  uncer- 
tainty appears  upon  the  face  of  this  guaranty  as  entitles  the  plain- 
tiff to  furnish  extrinsic  evidence  to  determine  its  signification. 

The  plaintiff,  however,  claims  the  right  to  resort  to  such 
evidence  to  show  that  the  defendants  intended  or  that  it  had  tlie 
right  to  infer  that  their  guaranty  was  intended  for  such  ])ersons 
as  should  advance  money  upon  T^.ingham  Bros.'  flrafts  before  their 
acceptance  by  Feigelstock. 


EVANSVILLE    BANK    VS.    KAUFMANN.  69 

Some  controversy  appears  by  the  cases  to  have  formerly  ex- 
isted in  respect  to  the  rii! :  governing  the  courts  in  the  construction 
of  guaranties,  whether  that  should  apply  which  entitled  a  surety  to 
have  his  contract  strictly  construed,  or  that  imposing  upon  a  party 
using  the  language  the  liability  of  having  it  interpreted  most 
strongly  against  him,  but  the  weight  of  authority  now  seems  to 
favor  that  construction  which  shall  accord  with  the  apparent  in- 
tention of  the  parties,  in  conformity  with  the  rule  governing  the 
construction  of  contracts  generally.  Riiidgc  v.  Judson,  24  N.  Y. 
70;  Gates  v.  McKec,  supra;  Dobbin  v.  Bradley,   17  Wend.  422. 

But  when  the  meaning  of  the  language  used  in  a  guaranty 
is  ascertained,  the  surety  is  entitled  to  the  application  of  the  strict 
rule  of  construction  and  cannot  be  held  beyond  the  precise  terms 
of  his  contract.  Gates  v.  McKec,  13' N.  Y.  232;  People  v.  Chal- 
mers, 60  id.  158;  Kingsbury  v.  Wcstfall,  61  id.  356. 

When,  therefore,  the  language  of  a  guaranty  is  ambiguous 
and  does  not  furnish  conclusive  evidence  of  its  meaning,  we 
are  entitled  to  look  at  all  of  the  circumstances  of  the  case  and 
arrive  at  the  intention  of  the  parties  from  these  sources  of  inform- 
ation. Agawani  Bank  v.  Sfrever,  18  N.  Y.  502 ;  Brandt  on  Sure- 
tyship, 106;  Walrath  v.  Thompson,  4  Hill,  200;  Fell's  Law  of 
Guaranty,  43;  Gates  v.  McKec,  supra;  Kcate  v.  Temple,  i  B.  & 
P.  158;  Springsteen  v.  Samson,  32  N.  Y.  703;  KarniuUer  v. 
Krot-,  18  Iowa,  352;  Hasbrook  v.  Paddock,  i  Barb.  637. 

/\ssuming,  therefore,  that  there  is  an  ambiguity  in  this  letter 
requiring  explanation,  we  will  examine  the  case  in  the  light  of 
the  general  principles  which  have  been  stated. 

The  action  is  based  upon  two  drafts  made  by  Bingham  Bros., 
of  Evansville,  Ind.,  upon  A.  Feigelstock,  of  New  York,  and  pay- 
able respectively,  one  for  $5,000  sixty  days  after  date,  and  one 
for  $2,500  fifteen  days  after  sight.  These  drafts  were  discounted 
by  the  plaintiff  at  its  bank  in  Evansville,  at  their  respective  dates, 
and  the  proceeds  duly  paid  to  Bingham  Bros.  Each  of  them  was 
afterwarcl  dulv  protested  for  non-acceptance  and  non-payment 
by  Feigelstock.  These  drafts  belonged  to  a  series  of  similar  char- 
acter discounted  by  the  plaintifif  for  Bingham  Bros.,  and  were  the 
only  ones  remaining  unpaid  by  Feigelstock  at  their  maturity. 

At  the  commencement  of  this  course  of  business  Bingham 
Bros,  produced  to  and  left  with  the  plaintiff  the  letter  of  credit 
upon  which  this  action  is  founded,  and  it  was  delivered  as  security 
for  the  amount  intended  to  be  loaned  upon  such  drafts. 


70  "  GUARANTY    AND    SURETYSHIP. 

No  bills  of  lading  or  consignments  of  property  by  Bingham 
Bros,  to  Feigelstock  accompanied  the  drafts,  and  that  for  $5,000 
appeared  upon  its  face  to  be  an  accommodation  draft.  Xo  notice 
of  these  transactions  was  ever  given  to  the  defendants,  and  it  did 
not  appear  that  they  had  any  knowledge  of  the  several  discounts. 
The  letter  expressing  the  guaranty  upon  which  the  action  is 
brought  is  as  follows : 

"New  York,  December  29,  1874. 
"Messrs.  Bingham  Bros.j  Evansville,  Ind. : 

"Dear  Sirs — Any  drafts  that  j^oii  may  draw  on  Mr.  A.  Feigelstock,  of 
our  city,  we  guarantee  to  be  paid  at  maturity. 

"Yours  truly, 

"Kaufmann  &  Blun." 

While  the  letter  will  be  seen  to  be  couched  in  broad  and 
indefinite  terms  with  respect  to  the  number,  amount  and  char- 
acter of  the  drafts  referred  to,  Bingham  Bros,  alone  are  addressed. 
However  general  may  be  the  description  of  the  subjects  guaran- 
teed, the  number  of  persons  authorized  to  accept  its  terms  is  not 
thereby  enlarged. 

The  letter  is  subject  to  all  of  the  limitations  expressed  there- 
in, and  also  to  such  as  may  fairly  be  implied  from  its  language, 
and  the  natural  course  of  business  transactions  between  its  sev- 
eral parties.  General  letters  of  credit  are,  from  necessity,  deliv- 
ered to  the  persons  who  expect  to  profit  by  their  aid,  and  are 
intended  to  be  exhibited  by  them  wherever  and  whenever  assist- 
ance is  required.  The  fact  of  the  possession  of  a  letter  of  credit 
by  a  person  from  whom  credit  is  sought  militates  against  its  gen- 
erality. The  absence  in  this  letter  of  any  assurance  that  the  drafts 
specified  should  be  accepted  on  presentation  seems  to  imply  that 
sight  drafts  alone  were  contemplated  by  the  parties. 

So  too  the  absence  of  any  reference  to  the  consideration  of 
this  guaranty  is  significant,  and  would  seem  to  suggest  to  a 
prudent  man  the  propriety  of  an  inquiry  into  the  situation  of 
the  parties,  and  the  nature  of  the  business  in  which  the  guaranty 
was  to  be  used  before  advancing  largely  upon  the  faith  thereof. 
Such  an  investigation  w^ould  have  enabled  the  plaintiff  to  see  that 
it  v^as  not  justified  in  drawing  the  inference  which  it  claims  to 
have  done  from  the  language  of  this  instrument. 

Bingham  Bros,  resided  and  were  manufacturers  of  spirits  at 
Evansville,  in  the  State  of  Indiana,  remote  from  the  guarantors 
and  the  'drawee  of  the  drafts.     Feigelstock  was  a  merchant  resid- 


EVANSVILLE    BANK    VS.    KAUFMANN.  71 

ing  in  New  York  eng-aged  in  the  business  of  receiving  and  selling 
on  commission,  goods  consigned  to  him  by  third  parties. 

The  plaintiff  was  a  bank  doing  business  in  the  State  of  In- 
diana, and  the  defendants  were  merchants  in  the  city  of  New 
York.  At  the  date  of  the  guaranty  these  various  parties  were 
strangers  to  each  other,  except  that  the  plaintiff  and  Bingham 
Bros,  resided  at  the  same  place,  and  had  previously  had  business 
transactions  together.  There  is  no  evidence  as  to  the  relations 
existing  between  the  defendants  and  Feigelstock,  but  it  is  claimed 
in  the  answer  and  was  offered  to  be  proved  on  the  trial  that  they 
were  strangers  to  each  other,  and  that  the  guananty  was  given 
by  the  defendants  as  a  favor  to  a  person  who  was  in  their  empl6y, 
and  who  was  a  relative  of  Feigelstock. 

There  would  seem  to  be  no  motive  reasonably  inferable  from 
such  a  situation  and  relationship  sufficiently  powerful  to  induce 
the  defendants  to  lend  their  unlimited  credit  for  the  benefit  and 
advantage  of  Bingham  Bros,  alone.  The  contention  of  the  plain- 
tiff leads  to  the  proposition  that  it  had  a  right  to  infer  that  Bing- 
ham Bros,  were  authorized  by  the  defendants  to  go  to  any  place 
and  with  any  person  contract  to  bind  the  defendants  for  unlim- 
ited sums.  Under  such  a  construction  the  defendants  could  never 
revoke  this  authority,  for  it  would  be  practicelly  impossible  to 
reach  by  notice  all  of  the  persons  who  might  be  applied  to  for 
advances  upon  this  letter. 

To  uphold  this  judgment  we  are  required  to  hold  that  the 
plaintiff  had  the  right  to  infer  from  the  language  of  the  letter, 
and  the  circumstances  of  the  case,  that  the  defendants,  without 
any  apparent  motive  for  so  doing,  had  clothed  Bingham  Bros, 
with  irrevocable  authority  to  use  their  names  in  borrowing  money 
at  remote  and  multiplied  points,  for  unlimited  amounts  and  unre- 
stricted periods  of  credit. 

Certainlv,  if  the  plaintiff  believed  this,  it  was  not  justified 
in  placing  much  reliance  upon  the  continued  responsibility  of  per- 
sons transacting  business  in  so  reckless  a  manner. 

A  transaction  of  such  a  character  would  be  so  improvident 
and  unnatural  that  to  establish  it  in  any  case  should  require  the 
strongest  evidence,  but  especially  so  when  it  is  claimed  that  such 
powers  have  been  conferred  upon  entire  strangers. 

The  unnatural  confidence  in  others,  and  the  careless  assump- 
tion of  obligations  which  such  a  course  of  business  would  im- 
ply, is  so  unusual  as  to  justify  the  requirement  that  if  such  an 


72  Gl'ARAXTN'    AXD    SUKICTYS  1 1 1  P. 

authority  was  intended  to  be  conferred  it  should  have  been  ex- 
pressed in  clear  and  unequivocal  language. 

It  is  obvious  that  neither  Feigelstock  nor  Kaufmann  &  Rlun 
could  have  derived  any  benefit  or  advantage  from  the  discount 
of  bills  whose  ])roceeds  were,  as  appears  from  the  face  of  the 
transaction,  intended  for  the  sole  use  of  Bingham   l5ros. 

Even  if  the  relation  of  consignor  and  consignee  existed 
between  Bingham  Bros,  and  Feigelstock,  we  do  not  think  the 
usual  course  of  business  between  such  parties  justifies  the  assump- 
tion that  the  use  of  accommodation  paper  for  either  limited  or 
unlimited  amounts  is  the  necessary  or  usual  accompaniment  of 
such  a  connection.  (  )n  the  other  hand,  if  we  consider  this  letter 
as  intended  to  furnish  a  credit  to  h'eigelstock  with  the  manufac- 
turers and  consignors  of  property  in  which  he  dealt,  it  would  sat- 
isfy the  apparent  oliject  of  the  letter,  and  the  transaction  would 
assume  a  natural  and  reasonable  character  such  as  pertains  to  the 
ordinary  and  usual  course  of  business  among  commercial  men. 

There  would  necessarily  be  a  limit  to  such  a  course  of  busi- 
ness, and  the  lial)ility  of  tlie  defendants  would  be  modified  by 
the  transfer  of  ])roperty  to  correspond  with  the  amount  of  the 
obligation  assumed,  and  creating  a  liability  which  might  be  safely 
and  reasonal)ly  incurred.  Of  course,  if  the  defendants  have 
signed  a  guaranty,  cither  general  or  special,  upon  a  sufficient  con- 
sideration, by  which  they  have  unqualifiedly  promised  to  become 
liable  for  the  i)ayment  of  all  such  drafts  as  Bingham  Bros,  might 
thereafter  draw  on  Feigelstock.  their  liabilty,  however  compre- 
hensive, would  not  l)e  affected  by  its  imprudence.  lUit  such  is 
not  the  contract  under  consideration. 

We  are,  therefore,  of  the  opinion,  from  the  fact  that  the  letter 
was  addressed  to  Bingh.im  i'ros.  alone,  the  absence  of  any  allusion 
to  its  consideration  or  the  negotiability  of  the  drafts  therein  re- 
ferred to,  ruid  a  consideration  of  the  situation  and  relation  of  the 
parties,  that  the  intention  could  not  fairly  be  imputed  to  the 
defendants  of  making  the  guaranty  contained  in  the  letter  general 
and  open  for  acceptance  by  any  one  who  nn'ght  choose  to  comply 
with  its  terms. 

We  have  been  unable  to  find  any  case  which  either  recptires 
or  authorizes  the  classification  of  this  letter  as  a  general  guar- 
anty. In  each  of  the  numerous  cases  cited  in  which  the  instru- 
ment considered  was  held  to  be  a  general  guaranty,  it  was  either 
addressed  generally  or  the  guaranty  contained  inherent  evidence 


EVANSVILLE    BANK    VS.    KAUFMANN.  73 

that  it  was  intended  to  be  used  in  obtaining  credit  wherever  it  was 
needed. 

*  *  *  *  ^i  *  :|:  H:  ■     =!:  * 

We  have  thus  seen  that  no  cause  of  action  accrued  to  the 
plaintifif  upon  the  guaranty,  for  the  reason  that  it  is  a  special 
guaranty  upon  which  the  party  addressed  alone  could  act  and 
acquire  a  cause  of  action.  Some  confusion  has  arisen  in  the 
consideration  of  this  case  from  an  omission  to  regard  the  obvi- 
ous distinction  existing  between  a  cause  of  action  accruing  to  the 
plaintiff  in  its  own  right,  upon  the  discount  by  them  of  such 
drafts,  and  one  arising  in  favor  of  Bingham  Bros,  either  prior 
to  or  simultaneous  with  such  discount  of  which  the  plaintiff  now 
seeks  to  avail  itself  as  their  equitable  assignee.  Different  consid- 
erations are  required  to  support  these  different  contracts.  The 
court  below  reversed  the  judgment  entered  upon  the  report  of 
the  referee  in  favor  of  the  defendants  upon  the  grounds  stated  in 
the  opinion  as  follows:  "In  the  view  insisted  upon  by  the  respond- 
ent the  letter  of  credit  in  question  in  this  case  was  a  special  letter 
or  promise  to  Bingham  Bros.  In  that  view  it  was  a  valid  contract, 
for  it  would  be  so  read  by  the  law  as  to  supply  the  consideration 
so  far  as. necessary  under  the  former  statute  of  frauds.  Tf  you 
will  draw  on  him  I  will  guarantee  that  any  draft  you  may  draw 
on  Mr.  A.  Feigelstock  of  our  city  will  be  paid  at  maturity,'  or  it 
would  be  regarded  an  original  promise  under  the  case  of  Gates  v. 
McKee,  13  N.  Y.  235,  and  the  defendants  held  to  the  established 
construction  of  such  instruments." 

The  court  here  seems  to  imply  that  there  are  two  grounds 
upon  which  the  action  could  be  maintained,  viz. :  because  the 
promise  was  an  original  as  distinguished  from  a  collateral  one, 
and  secondly,  because  a  cause  of  action  accrued  to  Bingham  Bros, 
upon  making  the  drafts  in  suit,  and  that  cause  of  action  passed 
to  the  plaintiff  as  their  equitable  assignee  by  the  delivery  of  the 
letter  to  them,  and  their  discount  of  the  drafts.  We  do  not  think 
that  either  of  these  grounds  can  be  sustained. 

It  is  entirely  immaterial  whether  this  guaranty  be  regarded 
as  an  original  or  collateral  contract.  Both  equally  required  a 
consideration  to  support  them,  and  the  distinction  between  theln 
is  important  only  as  affected  by  the  statute  of  frauds,  a  collateral 
contract  to  pay  the  debt  of  another  being  required  by  that  statute 
to  be  in  writing,  while  an  original  undertaking  is  valid  even  if 
made  by  parol.     No  question  arises  respecting  the  validity  of  this 


74  GUARANTY   AND    SURETYSHIP. 

promise,  except  in  regard  to  its  want  of  consideration.  If,  there- 
fore, we  could  call  this  an  original  undertaking,  the  promise  hav- 
ing, as  we  have  seen,  been  made  to  Bingham  Bros,  alone,  it  still 
lacks  the  indispensable  requirement  of  a  consideration  to  sup- 
jKtrt  it. 

This  consideration  must  be  proved,  and  a  presumption  of  its 
existence  can  no  more  be  indulged  in  to  support  the  action  than 
the  presumption  of  any  other  fact  material  to  the  existence  of 
a  cause  of  action.  Commercial  and  business  paper  generally 
specifies  a  consiaeration  upon  its  face,  and  a  defense  thereto  on 
the  ground  of  a  want  of  consideration  must  be  supported  by 
atifirmative  proof  of  such  fact,  but  when  the  paper  itself  does  not 
state  a  consideration  the  omission  must  be  sui)plied  l)y  affirmative 
proof  on  the  part  of  the  holder,  or  he  cannot  recover  thereon. 
(I  Parsons  on  Contracts,  175.)  No  consideration  is  referred  to 
in  this  letter,  and  the  drafts  are  the  act  of  Bingham  Bros,  alone, 
and  are  evidence  of  no  fact  stated  therein  as  against  any  one, 
except  the  drav.ers.  But  even  the  drafts  dcj  not  purport  to  be 
drawn  for  value. 

In  every  aspect  in  which  this  transaction  can  l)e  regarded 
Bingham  Bros,  appear  as  the  makers  of  the  drafts  for  their  own 
accommodation,  and  as  such  personally  liable  to  all  who  thereafter 
become  parties  thereto. 

We  have  no  difficulty  in  regarding  the  plaintiff  as  the  equi- 
table assignee  of  any  cause  of  action  existing  against  the  defend- 
ants in  favor  of  Bingham  Bros.  As  has  been  already  stated,  if 
any  such  cause  of  action  arose,  it  was  assignable  and  must  l)e  con- 
sidered to  have  passed  to  the  plaintilit'  by  the  delivery  of  the  guar- 
anty and  the  payment  by  it  of  the  proceeds  of  the  drafts  to  Bing- 
ham Bros.  It  thereby  became  the  equitable  owner  of  such  cause 
of  action  and  of  such  an  interest  in  the  letter  of  credit  as  w'ould 
enable  it,  under  our  Code,  to  maintain  an  action  against  the 
defendants.  But  the  question  is  presented,  did  any  such  cause  of 
action  ever  arise?  We  have  been  unable  to  discover  any  ground 
upon  which  such  a  claim  can  be  plausibly  sustained.  The  letter 
certainly  contains  no  reference  to  any  consideration  received  by  its 
writers,  and  the  proof  shows  none  advanced  by  Feigelstock  to 
them  or  b}^  Bingham  Bros,  to  either  Feigelstock  or  the  guarantors. 

Upon  the  very  face  of  the  transaction  Bingham  Bros,  drew 
their  drafts  for  their  own  benefit  and  contemplated  the  acceptance 
by   Feigelstock  for  their  accommodation.     Taking  the   strongest 


EVANSVILLE    BANK    VS.    KAUFMANN.  75 

view  against  the  defendants  which  the  case  is  susceptible  of,  they 
occupied  simply  the  position  of  proposed  accommodation  guar- 
antors of  the  contemplated  accommodation  acceptor  of  Bingham 
Bros."  drafts ;  and  it  certainly  cannot  be  claimed  that  they  thereby 
incurred  any  liability  to  the  party  for  whose  accommodation  they 
had  guaranteed  such  obligations.  Atkinson  v.  Monks,  i  Cow. 
692;  I  Parsons  on  Contracts,  184;  Thurnian  v.  Van  Brunt,  19 
Barb.  409;  Daniel's  Negotiable  Instruments,  §  189.  Even  if  the 
letter  of  credit  be  read  as  paraphrased  by  the  court  below,  it  falls 
far  short  of  establishing  a  consideration  moving  to  the  defendants. 

It  cannot  be  seriously  claimed  that  a  proposition,  either  writ- 
ten or  oral,  made  by  one  person  to  another,  agreeing  to  guarantee 
the  payment  of  any  draft  which  the  other  might  draw,  furnished 
a  sufficient  consideration  for  the  promise.  Such  a  request  is  im- 
plied in  all  accommodation  papers  as  between  the  parties  thereto, 
and  if  this  were  held  to  import  a  sufficient  consideration,  it  would 
destroy  all  distinctiou  between  accommodation  and  genuine  busi- 
ness obligations.  But  this  letter  of  credit,  as  read  by  the  court 
below,  would  not  confer  a  cause  of  action  upon  third  parties,  even 
if  it  had  been  addressed  to  them,  without  proof  that  they  had 
parted  with  value  upon  its  faith.  In  all  of  the  cases  cited  where 
guarantors  have  been  held  liable,  even  to  third  persons,  upon  such 
instruments,  the  letter  embraces  either  an  express  or  implied  re- 
quest to  such  persons  to  advance  value  upon  the  faith  of  the  paper 
therein  described,  and  it  is  because  they  have  parted  with  value 
upon  such  request  that  the  liability  of  the  promisor  to  them  is 
predicated.  If  no  liability  is  incurrred  in  favor  of  a  third  party 
unless  he  has  parted  with  value,  much  less  can  it  be  claimed  that 
it  is  in  favor  of  an  original  party  to  the  contract,  from  whom,  as 
is  shown  affirmatively,  no  consideration  whatever  proceeded.  We 
are,  therefore,  of  the  opinion  that  the  plaintiff  is  not  entitled  to 
maintain  this  action. 

The  order  of  the  General  Term  should  be  reversed,  and  the 
judgment  rendered  upon  the  report  of  the  referee  affirmed. 

All  concur,  except  Danforth,  J.,  not  voting. 

Order  reversed,  and  judgment  affirmed. 


NoTj. — jiiat  part  of  the  opinion  commenting  upon  and  distinguishing  certain  cases 
is  omitted. 


76  GUARAXTV    AXn    STRrnVSHIP. 

SiXGKu  Man"f(;  Co.   I's.   Lrni.KK  ct  al.    (1881). 

56  la.  601  ;  9  X.  W.  905. 

Appeal  from  Wapello  circuit  court. 

Action  at  Law.  The  cause  was  tried  to  the  court  below 
without  a  jury,  and  judgment  was  rendered  for  defendants. 
Plaintitf  a])peals.     The  facts  of  the  case  api)ear  in  the  opinion. 

D.  /'.  Miller  and  //.  />.  Ilcmlcrshott,  inv  ajjpellant. 
//'//;.  McXctt.  tor  appellees. 

IjKck,  j.  I.  TIk'  action  is  upon  a  bond  executed  by  Littler 
as  princijial,  and  the  other  defendants  as  sureties,  conditioned 
that  Littler  shall  pay  to  i)laintitY  all  his  indebtedness  to  it,  existing 
or  afterwards  to  exist,  whether  upon  notes,  accounts,  or  in  any 
other  manner.  The  petition  alleges  that  Littler  became  agent  of 
plaintiff  for  the  sale  of  sewing  machines,  and  the  bond  in  suit  was 
executed  when  he  was  appointed,  to  secure  plaintiff  from  loss  that 
might  accrue  on  account  of  his  employment.  The  petition  alleges 
that  Littler  became  delinquent  in  his  payments  and  executed  a 
note  to  i^laintiff,  upon  which  a  judgment  was  afterward  rendered 
for  the  amount  of  his  indebtedness.  The  sureties  answered  the 
petition,  alleging  that  Littler  and  the  plaintiff  entered  into  an 
agreement  whereby  Littler  became  plaintiif's  agent,  and  became 
bound  to  pay  to  plaintiff  money  upon  the  sales  of  sewing  machines, 
or  upon  tlie  indorsement  of  paper  taken  upon  such  sales,  as  stipu- 
late'd  in  the  agreement.  The  agreement  provides  that  either  party 
may  terminate  the  contract  at  their  pleasure.  Other  conditions 
need  not  be  set  ovit. 

The  answer  further  alleges  that  plaintiff  had  terminated 
Littler's  agency  before  the  note  was  executed  by  him,  and  that 
the  defendants  had  no  notice  at  any  time  that  Littler  was  in  de- 
fault, or  that  an\-  claim  was  made  by  plaintiff  against  them  upon 
the  bond.  Upon  a  demurrer  to  this  answer,  the  court  held  that 
the  defendants  were  entitled  to  notice  of  the  amount  due  from 
Littler  within  a  reasonable  time  after  the  settlement  between  him 
and  plaintiff.  The  court  found  upon  the  trial  that  no  such  notice 
was  given  to  the  defendants,  wherefore  they  suffered  loss,  and 
that  plaintiff,  therefore,  is  not  entitled  to  recover. 

2.  The  controlling  question  in  the  case,  and  the  only  one 
argued  by  counsel,  involves  the  correctness  of  the  court's  ruling 


SINGER  MFG.   CO.   VS.   LITTLER.  77 

in  holding  that  defendants  are  not  hable  for  the  reason  that  notice 
was  not  given  them  of  the  extent  of  Littler's  habihty  within  a 
reasonable  time  after  his  agency  was  terminated,  and  his  indebt- 
edness fixed  by  his  settlement  with  plaintiff.  The  ruling  of  the 
court,  we  think,  is  correct,  and  in  accord  with  Daz'is  Sczving 
Machine  Co.  v.  Mills,  8  N.  W.  356.  We  held  in  that  case,  "where 
the  guaranty  is  a  continuing  one,  and  the  parties  must  have  under- 
stood their  liability  thereunder  would  be  increased  and  diminished 
from  time  to  time,  and  the  guaranty  is  uncertain  as  to  when  it 
will  cease  to  be  binding  upon  the  guarantor,  and  when  the  party 
indemnified  has  the  power  at  pleasure  to  annul  and  put  an  end 
to  the  contract  guarantied,  without  the  knowledge  of  the  guaran- 
tor, he  is  entitled  to  notice,  within  a  reasonable  time  after  the 
transactions  guarantied  are  closed,  of  the  amount  of  his  liability 
thereunder."  It  will  be  observed,  upon  considering  the  statement 
of  the  terms  of  the  contract  guarantied  as  above  set  out,  that  they 
are  within  this  rule,  and  diat  under  it  the  defendants  in  this  case 
are  not  liable,  in  the  absence  of  the  notice  contemplated  dierein. 

3.  But  counsel  for  plaintiff,  in  an  ingenious  argument,  at- 
tempt to  distinguish  this  case  from  Davis  Sewing  Machine  Co.  v. 
Mills.  They  insist  that  while  the  contract  in  that  case  was  a  guar- 
anty, in  this  case  defendants  are  not  guarantors,  but  are  sureties 
for  Littler,  and  are  jointly  liable  with  him  upon  an  original  con- 
tract. The  error  of  this  position  is  apparent.  Littler  was  or 
was  about  to  become  indebted  to  plaintiff  upon  the  contract  under 
which  he  was  appointed  agent.  Defendants  were  not  bound  upon 
that  contract.  Neither  were  they  bound  upon  the  notes,  accounts, 
acceptances,  or  upon  any  contract  upon  which  Littler  became  in- 
debted to  plaintiff.  They  became  first  and  only  bound  upon  the 
bond,  whereby  they  guarantied  that  Littler  would  pay  his  indel)t- 
edness  to  plaintiff  in  whatever  form  it  assumed.  A  guarantor 
becomes  bound  for  the  performance  of  a  prior  or  collateral  con- 
tract upon  which  the  principal  is  alone  indebted.  A  surety  is 
bound  with  the  principal  upon  the  contract  under  which  the  prin- 
cipal's indebtedness  arises.  This  is  a  familiar  doctrine  of  the  law. 
Upon  applying  it  to  the  facts  of  the  case,  it  will  be  seen  that  de- 
fendants are  guarantors,  and  not  sureties,  for  the  performance  of 
the  contract  upon  which  Littler's  indebtedness  to  plaintiff  arose. 
They  were  therefore  entitled  to  notice  under  the  rule  of  Davis 
Sezvinz  Machine  Co.  v.  Mills. 


78  GUARANTY    AND   SURETYSHIP. 

It  may  be  observed  tbat  guarantors  are  often  called  sureties. 
We  use  tbe  tenn  "sureties"  in  tlie  foregoing  discussion,  to  describe 
one  wbo  is  bound  b\-  a  contract  with  his  principal — who  joins 
with  his  principal  in  the  execution  of  the  contract,  and  becomes 
pecuniarly  liable  thereon.  But,  as  we  have  seen,  a  guarantor — 
the  suretv  in  a  contract  of  guaranty — is  not  primarily  liable  upon 
the  principal's  contracts,  and  only  becomes  liable  upon  his  default. 
A  guarantor,  under  this  rule,  is  entitled  to  notice  of  the  amount  of 
his  liability  within  a  reasonable  time  after  that  liability  is  deter- 
mined by  the  transaction  between  the  original  debtor  and  creditor. 

It  is  our  opinion  that  the  judgment  of  the  circuit  court  ought 
to  be  affirmed. 


Taylor  et  al.  z's.  Wi:tmore  et  al.  (1841), 
10  Ohio  491. 

This  is  an  action  of  assumpsit  from  the  county  of  Portage. 

The  declaration  contains  two  special  counts.  In  the  first,  it  is 
averred  that  one  C.  D.  Farrar,  on  November  26,  1836,  being 
desirous  of  purchasing  a  general  assortment  of  goods  in  the  city  of 
Pittsburg,  for  a  retail  country  store,  on  a  credit,  and  being  unknown 
to  the  business  men  of  said  city,  applied  to  the  defendants,  Messrs. 
Wetmores,  then  doing  business  at  Cuyahoga  Falls,  in  Portage 
county,  for  a  general  letter  of  credit,  directed  to  some  one  or  more 
of  their  correspondents  in  the  said  city  of  Pittsburg,  by  means  of 
which  the  said  Farrar  might  be  enabled  to  make  his  purchases ;  and 
the  said  defendants  upon  such  application,  made  and  delivered  to 
Mr.  Farrar  a  letter  of  credit^  or  written  guaranty,  addressed  to 
Messrs.  A.  D.  McBride  &  Co.,  merchants  in  Pittsburg,  in  the  words 
following :    . 

"CcY.MioGA  Falls,   November  26,    1836. 
"Messrs.  A.  D.  McBride  &  Co. 

"Gentlemen :    Mr.    C.    D.    Farrar   has    concluded    to   purchase   a    few 
goods;  we  have  that  confidence  in  Mr.  Farrar,  that  we  will  say  that  we 
will  be  responsible  to  the  amount  of  $2,000  for  goods  delivered  him. 
"We  are  truly, 

"C.  W.  &  S.  D.  Wetmore." 


TAYLOR  VS.   WET  MORE.  79 

And  which  said  letter^  the  plaintiffs  aver  was  taken  by  Mr. 
P'arrar,  and  presented  to  Messrs.  McBride  &  Co.  at  Pittsburg,  who 
retained  it,  as  security  for  themselves  and  such  other  merchants  in 
the  said  city,  as  should,  at  that  time  and  on  the  faith  of  said  guar- 
anty, sell  goods  on  a  credit  to  the  said  Farrar. 

It  is  also  averred  that  Mr.  Farrar  was  unable  to  obtain  a  gen- 
eral assortment  of  goods  from  the  house  of  the  Messrs.  McBrides, 
whose  business  was  conhned  to  that  of  grocers,  and  therefore  he 
made  application  to  the  plaintiffs,  upon  the  strength  of  the  said 
guaranty,  then  in  the  hands  of  McBride  &  Co.  referring  the  plain- 
tiffs to  the  house  of  McBride  &  Co.  and  to  the  said  guaranty ;  that 
the  plaintiffs  did  in  fact  call  upon  McBride  &  Co.,  examined  the 
letter  of  credit,  and  being  satisfied  with  their  statements  in  regard 
to  the  responsibility  of  the  defendants,  and  of  the  guaranty,  in  con- 
sideration thereof,  sold  and  delivered  to  Mr.  Farrar,  upon  a  credit 
of  six  months,  a  bill  of  dry  goods,  amounting  to  $760.75  ;  of  all 
which  the  defendants  had  due  and  timely  notice.  The  plaintiff's 
then  aver  that  the  credit  has  expired,  and  that  Farrar  has  omitted 
to  pay,  etc. 

The  second  count  states  that  on  November  6,  1836,  etc.,  in  con- 
sideration that  the  plaintiffs  at  the  special  instance  and  request  of 
the  defendants,  would  sell  to  said  Farrar,  on  credit,  all  such  goods 
as  said  Farrar  should  have  occasion  for  and  require  of  said  plain- 
tiffs in  their  trade  and  business  of  wholesale  dry  goods  merchants, 
they,  the  defendants,  undertook  and  promised  to  pay  the  plaintiffs 
therefor ;  this  count  then  avers  the  sale  and  delivery  of  goods  to  the 
amount  of  $760.75.  on  a  certain  credit,  agreed  upon  between  the 
parties,  that  the  credit  had  expired,  that  Farrar  had  not  paid,  of 
which  the  defendants  had  notice ;  avers  their  liability,  and  breach 
in  the  non-payment. 

To  this  declaration  the  defendants  filed  their  plea  of  the  gen- 
eral issue. 

The  testimony  submitted  on  the  part  of  the  plaintiff's,  proves: 
I.  The  execution  and  delivery  of  this  mercantile  guaranty,  as  set 
forth  in  the  first  count  of  the  declaration  ;  and  2.  That  a  few  days 
after  its  date,  it  was  handed  to  the  firm  of  McBride  &  Company, 
who  not  being  dealers  in  dry  goods,  the  witness  (who  was  a  part- 
ner of  the  last  mentioned  firm),  went  with  Mr.  Farrar  to  the  plain- 
tiffs, and  the  said  guaranty  was  shown  to  Mr.  Taylor,  one  of  the 
plaintiffs ;  the  witness  stated  to  Mr.  Taylor,  that  he  had  sold  a  bill 
of  groceries  on  the  strength  of  the  letter,  and  Mr.  Taylor  then  said 


80  GUARANTY  AND  SURKTYSHIP. 

he  would  sell  a  bill  of  goods  on  the  strenj^th  of  the  same,  and  Mr. 
Farrar  accordingl)-  obtained  the  goods,  'i'he  elerk  and  salesman 
of  the  plaintiffs  prove  the  amcjunt  of  the  goods  sold  to  be  $760.75, 
and  on  a  eredit  of  six  months. 

The  evidenec  on  the  part  of  the  defendants  proves  that  l-'arrar 
was  in  business  at  Cuyahoga  Falls  from  Deeember,  1836,  until 
April  or  May,  1837,  when  he  transferred  all  his  goods  to  the  de- 
fendants, and  closed  his  store.  That  he  paid  none  of  his  debts  n. 
Pittsburg.  That  in  September,  1837.  the  witness  was  present  at  a 
conversation  between  Taylor,  cnie  of  the  ])laintiffs,  and  C.  W.  Wet- 
more,  one  of  the  defendants,  in  which  the  defendant  asked  Taylor, 
if  he  considered  him  responsible,  either  legally,  morally,  or  honor- 
ably, for  the  goods  h'arrar  had  purchased  of  him.  To  which  Taylor 
replied  he  did  not,  but  that  the  defendants  had  more  gcxjds  in  their 
possession,  received  of  Farrar,  than  they  were  holden  to  the  house 
of  McBride  for ;  that  the  goods  would  amount  to  $500  or  $700. 
To  this  the  defendant  re])lied  he  did  not  know  how  that  was;  that 
there  was  also  left  with  them,  ])y  I'arrar,  notes  and  accounts  to 
the  amount  of  about  S200,  and  what  they  could  not  make  up  out 
of  them,  must  be  made  up  out  of  the  goods;  and  if  there  was  any 
balance,  so  far  as  he  was  cc^ncerned,  that  should  go  to  the  plain- 
tiffs. 

Richard,  for  the  i)laintiffs. 

Wood,  1.  Tnder  ilie  averments  in  the  declaration,  and  the 
testimony  submitted,  are  the  ])lainiitTs  entitled  to  judgment? — and 
I  may  here  remark,  in  the  outset,  in  this  case,  that  I  know  of  no 
arbitrary  rule  applicaljle  to  actions  founded  upon  mercantile  guar- 
anties, which  creates  obligations  between  the  parties  to  which  they 
have  neither  expressly  nor  impliedly  assented.  in  all  actitms 
founded  in  contract,  the  agreement  as  set  forth  must  be  proved,  or 
the  circumstances  existing  between  the  parties  nmst  be  such  as  to 
leave  it  clearly  to  be  inferred.  In  enforcing  them,  courts  of  justice, 
thotigh  thcv  mav  sometimes  be  confined  by  technical  rules,  always 
endeavor  to  ascertain  the  understandings  and  intentions  of  the 
parties,  and  these  arc  considered  as  the  essence  of  their  agreements 
in  carrving  them  into  execution,  ^lercantile  guaranties  are  either 
general  or  special ;  though  a  single  letter  of  credit  may  bear  upon 
its  face  both  of  these  distinctions.  It  may  be  general,  as  to  the 
whole  world,  to  whom  the  bearer  may  be  accredited,  and  to  any 
portion  of  whom,  at  his  own  option,  he  may  make  the  guarantor 


CLARK  VS.   KELLOGG.  81 

a  debtor,  and  special,  as  to  the  amount  of  the  crecht ;  or  unhniited 
or  general  in  the  amount,  and  special  as  to  the  parties. 

The  first  inquiry  which  arises  here,  is,  whether  the  guaranty 
in  question  is  not  special  as  to  persons.  It  is  directed  to  the  house 
of  McBride  &  Co.,  in  the  city  of  Pittsburg,  and  nothing  upon  its 
face  evincing-  an  intention  to  give  h'arrar  credit,  or  to  incur  respon- 
sibility with  an}-  other  house. 

The  counsel  for  the  plaintiff  here  admit,  that  a  surety  can  not 
be  held  beyond  the  terms  of  his  engagement,  but  they  insist  that} 
although  it  is  addressed  only  to  AIcBride  &  Co.  as  it  does  not  say 
"we  will  be  responsible  to  yon;"  it  is  a  letter  of  credit  to  any  other, 
who  will  advance  the  goods.  It  seems  to  us,  this  reasoning  is  more 
ingenious  than  sound.  The  guaranty  being  addressed  to  A.  D. 
A'IcBride  &  Co.,  it  is  to  them  the  defendants  speak  when  they  sa}', 
"zve  zvill  be  responsible  to  the  amount  of  $2,000,"  and  it  contains 
no  general  terms,  by  which  either  Farrar,  or  the  house  of  McBride, 
had  the  authority  to  transfer  it  to  the  plaintiff's,  and  they  to  make 
the  defendants  their  guarantors,  without  their  assent,  express  or 
implied. 

Judgment  for  the  defendants.^ 


Clark  et  al.  z's.  Kellogg  (1893). 
96  Mich.  171  ;  55  N.  W.  676. 

Thomas  A.  Wilson,  for  appellants. 

Blair  &  Wilson  and  Parkinson  &  Day,  for  defendant. 

Montgomery,  J.  The  plaintiff's  sued  the  defendant,  counting- 
upon  a  breach  of  an  agreement  given  on  the  occasion,  and  in  con- 
sideration, of  the  purchase  by  the  plaintiffs  from  the  defendant  of 
a  stock  of  goods  and  a  quantity  of  notes  and  accounts.  That  por- 
tion of  the  agreement  material  to  be  considered  in  determining  the 
questions  involved  reads  as  follows : 

"The  said  party  of  the  first  part  *  *  *  does  covenant  and  agree  *  *  * 
that  the  annexed  invoice  is  a  true  statement  of  the  amount  and  vahie  of 
stock,  merchandise,  and  property,  and  also  guarantee,  represent,  and  war- 


'The   other   points  touched   upon   in   the   opinion   are   omitted. 
7 


82  GUARANTY    AND    SURKTVSIIIP. 

rant  that  there  is  in  said  stock  goods  to  the  value  of  $14,709.68;  also  that 
the  amount  of  $29,702.54  net  shall  be  realized,  without  charging  for  the 
personal  services  of  the  parties  of  the  second  part,  nor  other  charges  of 
second  parties,  except  incurred  in  suits,  1)\'  the  parties  of  the  second  part, 
upon  the  accounts  and  notes  hcnin  conveyed.  The  parties  of  the  second 
part  shall  use  due  diligence  in  their  collection." 

The  declaration  counted  it])un  this  a,^reetnent,  and  set  oitt  no 
sul)se(|uent  niocHfication  or  waiver  of  its  terms.  On  the  trial  the 
])laintiffs  souo;ht  to  recover  by  showing  that  they  had  dealt  with 
the  accounts  as  men  of  ordinary  business  judgment  wotild,  and  also 
sought  to  show  that  the  defendant  had,  as  to  a  large  portion  of  the 
accounts,  directed  the  plaintiffs  as  to  what  he  would  require  as 
evidence  of  due  diligence,  and  that  the  plaintiffs  had  com])lied  with 
the  demands  of  the  defendant  in  this  regard. 

1.  The  circuit  judge  constrtied  the  (Jriginal  contract  as  amount- 
ing to  a  guaranty  of  collection,  and  held  that  no  showing  of  dili- 
gence was  sufficient  which  did  not  include  proof  that  the  accounts 
had  each  been  ])ut  in  judgment,  and  execution  had  been  taken  oitt, 
and  returned  unsatisfied.  Idiis  ruling  was  un(iuestionably  right, 
if  the  ])ruper  construction  was  ])laced  on  the  contract.  Bosnian  v. 
ylkclcy,  39  Mich.  710;  Sclicniicrhoni  v.  Conner.  41  Id.  374. 

It  is  contended,  however,  that  the  contract  in  question  should 
iK/t  be  construed  as  a  guaranty  of  collection  of  each  individtial 
account,  reqtiiring  resort  to  legal  process  in  the  collection  of  each, 
but  amounted  to  a  warranty  and  representation  that  there  should 
be  realized  $29,702.54  from  the  total  of  the  accounts ;  and  that  the 
fact  that  the  amount  guaranteed  to  be  realized  was  much  less  than 
the  face  of  the  accounts  negatives  the  idea  that  resort  should  l)e 
had  to  suit  't]). )n  each  acc(-unt^  Idle  infirmity  of  this  con- 
struction is  that  it  ignores  the  subsequent  language,  "The  parties 
of  the  second  ])art  sludl  use  due  diligence  in  their  collection."  or 
accords  to  this  language  a  meaning  at  variance  with  the  settled  sig- 
nificance of  the  terms  emi)loyed.  What  constitutes  due  diligence 
is  settled  bv  the  cases  of  nosiiian  v.  Akclcy  and  Sclwrjncrhorn  v. 
Conner,  snpra. 

In  the  case  of  Ralph  v.  lildredin^e,  58  Hun.  203,  a  similar  (|ties- 
tion  was  ])resented.  Plaintiff  and  defendant  were  co-partners. 
Defendant  conveyed  his  interest  to  the  plaintifif  in  the  notes, 
accounts  and  demands  owing  to  the  firm.     The  defetidatil  at  the 


'Counsel  cited   Taylor  v.   .Vo/'cr.   53    Midi.   06;    Koch   v.   Mclhorn.   25    Penn.    St. 
Stntthcrs  v.  Clark,  30  Id.   _'io. 


DOVER   STAMPING   CO.    VS.    NOYES.  83 

same  time  executed  to  the  plaintiil  a  bond  with  the  condition  that 
defendant  should  pay  to  the  plaintiff  one-half  of  the  amount  of  the 
notes,  accounts,  and  claims  of  the  late  firm  assigned  by  defendant 
to  plaintiff  that  should  prove  to  be  uncollectil)le,  if  any  such  there 
should  be.    The  court  say  : 

"It  seems  to  be  settled  in  this  state  that  a  guaranty  of  collec- 
tion is  an  undertaking  to  pay  the  sum  of  money  guaranteed,  pro- 
vided the  principal  debtor  is  prosecuted  to  judgment  and  execution 
with  due  diligence,  and  the  same  cannot  be  collected  of  him.  *  *  * 
The  plaintiff  urges  that  the  bond  does  not  guarantee  the  collection 
of  these  claims,  but  is  only  a  contract  to  pay  plaintiff  one-half  of 
the  amount  of  those  which  should  turn  out  bad.  But  the  bond 
uses  the  word  'uncollectible,'  and  the  question  must  be,  what  is 
the  legal  meaning  of  that  word?  That  word  has  a  definite  mean- 
ing, as  decided  in  the  cases  above  cited  ;  and  that  meaning  should 
be  here  enforced." 

The  legal  signification  of  the  term  "due  diligence,"  as  applied 
to  a  guaranteed  note  or  account,  is  well  understood,  and  the  parties 
must  be  assumed  to  have  contracted  with  reference  to  that  meaning. 

2.  The  court  rightly  held  that  the  alleged  subsequent  waiver 
could  not  be  shown  under  the  pleadings  in  this  cause.  The  con- 
tract itself  having  fixed  upon  the  plaintiff's  a  specific  duty,  the  aver- 
ment in  the  declaration  that  the  plaintiff's  did  use  due  diligence 
amounted,  in  effect,  to  an  averment  that  they  had  pursued  the 
course  which  the  law  imposes  upon  them  in  order  to  charge  the 
guarantor.  If  they  relied  on  any  excuse  for  failing  to  use  due 
diligence,  this  should  have  been  counted  upon  in  the  declaration. 
Aldrich  v.  Cliiibb,  35  Mich.  350. 

Judgment  affirmed,  with  costs. 

The  other  Justices  concurred. 


Dover  Stamping  Co.  z's.  Noyes  (1890). 

151  Mass.  342;  24  N.  E.  53. 

Appeal  from  Superior  Court,  Suffolk  county. 

Action  by  Dover  Stamping  Company  against  B.  B.  Noyes  to 
recover  $210.20  and  interest  for  goods  sold  and  delivered  by  plain- 


84  GUARANTY    AND    SURETYSHIP. 

tiffs  to  1'.  P.  Field  &  Co.,  the  payment  of  which  plaintiffs  claim 
was  o^uarantied  by  defendant.  The  guaranty  relied  on  is  contained 
in  the  following  correspondence: 

"Boston,  Mass.,   U.  S.  A.,  Nov.   i8,  1887. 
"Messrs.  B.  B.  Noyes  &  Co. 

"Gentlemen :  We  have  recently  become  acquainted  and  opened  trade 
with  Messrs.  F.  P.  Field  &  Co.,  who  seem  to  be  good  fellows,  without 
much  money,  but  claim  to  be  backed  by  you.  Will  you  kindly  tell  us  if 
this  is  so, — if  we  can  consider  you  as  having  responsibility  for  their  debts, 
or  intending  to  see  that  they  are  paid.         Your  truly, 

"Dover  Stamping  Co.     C.  D.  F." 

"Greenfield,  Mass.,  Nov.  21,  1887. 
"The  Dover  Stamping  Co.,  Boston,  Mass. 

"Gentlemen:  We  have  your  favor  of  the  eighteenth  instant,  relating 
to  the  firm  of  F.  P.  Field  &  Co.  As  Mr.  Noyes  is  away,  writer  cannot 
say  what  arrangement  he  has  made  with  them  as  to  being  responsible  for 
their  bills,  but  should  presume  they  would  not  misrepresent  any  arrange- 
ment they  may  have  with  him.  Mr.  Noyes  has  helped  this  firm  some  in 
starting,  and  considers  them  good,  honest,  hard-working  fellows,  who 
will  be  likely  to  meet  their  bills.         Yours  respectfully, 

"B.  B.  Noyes  &  Co.      Jones." 

"iiosTON,  Mass.,  U.  S.  A.,  Nov.  22,  1887. 
"Messrs.  B.  B.  Noyes  &  Co. 

"Gentlemen :  Your  favor  of  the  twenty-first  instant  is  at  hand.  We 
are  obliged  to  you  for  your  attention  to  our  request,  and  glad  to  hear 
that  Alessrs.  F.  P.  Field  &  Co.  stand  so  well  with  you.  We  would,  how- 
ever, like  to  hear  from  Mr  Noyes  on  his  return.  It  is  needful  for  us  to 
know  whether  the  statement  of  the  young  men  is  correct  or  not,  as,  leav- 
ing out  the  question  of  misrepresentation,  they  evidently  have  not  enough 
of  the  'sinews  of  war,'  of  their  own,  to  carry  on  business  successfully, 
however  competent  and  energetic  they  may  be.       Your  truly, 

"Dover  Stamping  Co.      C.  D.  F." 

"Greenfield,  Mass.,  Nov.  28,  1887. 
"Dover  Stamping  Co.,  Boston,  Mass.,  North  Street. 

"Dear  Sirs :  Answering  yours  of  22d,  I  am  assisting  F.  P.  Field  &  Co. 
in  a  small  way,  financially,  and  in  a  measure  directing  their  efforts ;  and 
I  have  advised  them  to  pay  their  bills  promptly  at  maturity,  and,  if  they 
find  they  are  unable  to  do  so  at  any  time,  to  let  me  know,  i  think  they 
will  follow  my  advice  in  your  case.  If  they  fail  to,  please  let  me  know, 
and  1  will  see  that  you  are  taken  care  of.  B.  B.  Noyes." 

"Boston,  Mass.,  U.  S.  A.,  Nov.  29,  1887. 
"Messrs.  B.  B.  Noyes  &  Co. 

"Gentlemen :  Your  esteemed  favor  from  Mr.  B.  B.  Noyes,  in  person, 
is  received.     We  are  much  obliged  for  the  assurance  given  us  regarding 


DOVER   STAMPING   CO.    VS.    NO  YES.  85 

Messrs.  F.  P.  Field  &  Co.,  and,  on  the  strength  of  it,  will  be  glad  to  con- 
tinue the  trade.  Yours  truly, 

"Dover  Stami-ing  Co.      C.  D.  F." 

There  was  judgment  for  plaintiff.     Defendant  appeals. 

E.  Mcrwin,  for  plaintiff. 

Greene  &  Grlswold,  for  defendants. 

Knowltox,  J.  The  decision  of  this  case  depends  on  the 
proper  interpretation  of  the  correspondence  relied  on  by  the  plain- 
tiff corporation  as  showing  a  continuing  guaranty  by  the  defend- 
ant that  F.  P.  Field  &  Co.  would  pay  at  maturity  any  debts  they 
might  contract  in  their  dealings  with  the  plaintiff.  If  these  letters, 
fairly  construed,  authorized  the  plaintiff'  to  sell  goods  to  Field  & 
Co.  from  time  to  time,  to  be  paid  for  by  the  defendant  if  not  paid 
for  by  the  purchasers,  the  plaintiff  is  entitled  to  recover.  The 
plaintiff's  first  letter  was  manifestly  written  in  reference  to  pos- 
sible future  transactions.  It  says  that  the  corporation  has  recently 
"opened  trade"  with  Field  &  Co.,  and  refers  to  their  representation, 
apparently  made  with  a  view  to  obtaining  credit.  The  inquiry 
relates  to  the  subject  of  legal  liability.  The  defendant  is  asked 
whether  he  will  be  responsible  for  their  debts,  or  will  see  that  the 
debts  are  paid.  Upon  receiving  the  letter  of  November  21st,  writ- 
ten by  the  defendant's  clerk,  in  his  absence,  and  containing  a 
recommendation  of  Field  &  Co.,  the  plaintiff',  by  its  letter  of 
November  22d,  said,  in  effect,  that  it  was  not  content  with  a  recom- 
mendation', but  wanted  an  explicit  answer  to  its  former  letter. 
Thereupon  the  defendant  wrote  the  letter  of  November  28th,  stat- 
ing that  he  was  financially  assisting  Field  &  Co.,  and  promising 
to  see  that  the  plaintiff  was  "taken  care  of,''  if  notified  that  Field 
&  Co.  failed  to  pay  their  bills  promptly  at  maturity.  This  can 
hardly  be  construed  as  anything  less  than  a  promise  to  pay  if  the 
principal  debtor  did  not.  It  also  had  reference  to  bills  to  be  con- 
tracted in  the  future ;  for  it  was  written  in  answer  to  the  plaintiff's 
questions,  and  Field  &  Co.'s  possible  inability  to  pay  promptly  was 
spoken  of  as  something  which  they  might  discover  "at  any  time." 
If  it  was  necessary  to  give  notice  of  the  acceptance  of  a  guaranty 
given  in  this  way,  which  we  do  not  intimate,  the  plaintiff  by  its 
letter  of  November  29th  accepted  it.  and  notified  the  defendant 
that  it  would  continue  the  trade  on  the  strength  of  it.  Here  we 
find  all  the  elements  of  a  valid,  continuing  guaranty;  and  it  is 
agreed  that  on  the  faith  of  it  the  plaintiff'  sold  goods  which  never 


86  GUARANTY    AND    SURETYSHIP. 

liave  Ix'cn  paid  for,  of  which  the  (lefcndant  has  liad  due  notice. 
L'pon  the  ag-reed  facts,  the  plaintiff's  case  is  made  out.  Paige  v. 
Parker.  8  Gray,  211;  Bent  v.  Hartshorn,  i  Mete.  24;  Jordan  v. 
Dobbins,  122  Mass.   170. 

Judgment  for  the  plaintiff. 


E.  A.  Sherburnf.  vs.  J.  W.  T'.uti.kr  I'aper  Co.  (1891). 
40  Illinois  App.  383. 

E.  A.  Sherburne,  pro  se. 

Messrs.  McClcUan  &  Ciininiins  and  Leiiniel  II.  foster,  for 
appellee. 

Waterman,  J.  The  evidence  in  this  case  was  that  appellant 
gave  to  appellee  the  following  guaranty : 

GUARANTY. 

"In  consideration  of  one  dollar  ($1.00)  lo  me  in  hand  paid  by  the 
J.  W.  Butler  Paper  Company,  of  Chicago,  Illinois,  the  receipt  whereof  is 
hereby  acknowledged,  and  for  other  good  and  valuable  considerations,  I 
hereby  guarantee  to  the  said  J.  W.  Butler  Company  the  payment,  at 
maturity,  of  any  hills  of  account  due  them  for  merchandise  hereafter 
from  time  to  time  sold  and  delivered  by  them  to  the  Eureka  Roofing 
Company,  of  Chicago,  whether  sold  on  open  account  or  on  notes  to  the 
amount  of  $30,  on  twenty  days"  time. 

"And  1  hereby  authorize  the  said  J.  W.  Butler  Paper  Company  to 
extend  the  time  of  payment  in  any  manner  that  may  he  agreed  upon  be- 
tween them  and  the  said  Eureka  Roofing  Company,  without  any  notice 
to  me,  and  no  such  extension  of  time  of  payment  shall  affect  my  liability 
on  this  guaranty. 

"This  said  guaranty  to  remain  in  full  force  and  effect  until  revoked 
by   me   in  writing. 

"Witness  mv  hand  and  seal  at  Chicago,  this  9th  day  of  December, 
A.  D.   1884. 

(Signed)  "E.  A.  Sherburne,        [seal] 

"115  Monroe  St." 

'Jdiat  thereafter  appellee  delivered  roofing  felt  to  the  luireka 
Roofing  Co.,  and  charged  to  it  upon  its  hooks  such  goods  to  the 
amount  of  $51.40. 

Appellee  also  introduced,  withotit  ohjection,  a  letter,  purport- 
ing to  he  signed  l)v  appellant,  stating  that  he  had  a  note  from  Mr. 


SMITH  VS.  VAN   WYCK. 


87 


Fuller  of  the  Roofing  Co..  "to  the  effect  that  he  had  arranged  that 
$27.65  of  the  J.  W.  Butler  Paper  Co."  The  original  entry  book 
of  the  Paper  Company,  showing  the  charges,  was  introduced  with- 
out objection.  The  bill  had  been  repeatedly  presented  to  the  Roof- 
ing Company. 

The  guaranty  was  a  continuing  one.  It  distinctly  guarantees 
the  payment,  not  of  one  bill  or  specified  bills,  but  of  any  bills  to 
the  amount  of  $30.  Brandt  on  Suretyship  and  Guaranty  Sec.  130; 
Loii^e  V.  Beckuiith,  14  B.  Monroe  (Ky.)  150;  Murray  v.  Raynor, 
22  Pick.  223. 

The  only  evidence  of  the  payment  of  anything  by  the  Roofing 
Company  was  contained  in  the  bill  presented  to  it  for  payment. 

The  finding  and  judgment  for  $27.50  of  the  court  below  was 
in  accordance  with  the  law  and  the  evidence,  and  the  judgment  is 
affirmed. 

Judgment  affirmed. 


Smith  et  al.,  Appellant,  I's.  Van  Wyck,  Respondent.,   (T890), 
40  Mo.  App.  522. 

Jenkins  &  IVclls,  for  appellant. 
C.  O.   Tichcnor,  for  respondent. 

Smith,  P.J.  *   *  *  The  plaintiffs  sued  defendant  upon  this 

undertaking : 

"Kansas  City,  Mo.,  July,  1885. 
"I  hereby  guarantee  the  payment  of  bills  as  they  mature,  purchased 
by  E.   S.    Mendenhall,  of   R.   P.    Smith  &   Sons,  of  Bloomington,   Illinois, 
to  the  amount  of  thirteen  hundred  dollars   ($1,300). 

"T.  C.  Van  Wyck, 
"1501    East   Eighteenth   Street." 

For  a  liill  of  goods  amounting  to  $1,240.60,  sold  by  plaintiffs  to 
said  Mendenhall.  The  facts  and  circumstances  surrounding  the 
execution  of  the  said  undertaking,  and  the  relation  of  the  parties 
thereto,  and  to  each  other,  may  be  summarized  thus:  Defendant 
had  rented  to  Alendenhall  a  store  and  business  house.  Menden- 
hall had  placed  with  one  of  the  plaintiff's,  who  were  wholesale 
merchants,  an  order  for  goods  amounting  from  thirteen  hundred 
to  seventeen  hundred  dollars.     The  plaintiffs  hesitated  about  fill- 


88  GUARANTY  AND  SUkKTVSHIP. 

ing  the  order,  and  one  of  them  went  to  defendant  and  told  him 
that  Mendenhall  had  placed  with  them  an  order  for  goods  to 
the  amount  stated,  and  that  they  did  not  like  to  fill  the  same 
unless  defendant  would  guarantee  the  payment  thereof ;  that  if 
defendant  would  give  his  guaranty  for  thirteen  hundred  dollars, 
and  if  they  sold  Mendenhall  more  goods  than  that,  on  such  excess 
they  would  take  their  chances  for  collecting.  That  thereupon  the 
defendant  signed  the  un<lertaking  sued  on.  The  ])laintitis  deliv- 
ered Mendenhall  goods  to  the  amount  of  the  defendant's  guaranty, 
for  the  payment  of  which  the  defendant  furnished  part  of  the; 
money.  1die  plaintiffs  thereafter  continued  to  sell  goods  to  Men- 
denhall for  ahout  two  years,  amounting  in  the  total  to  several 
thousand  dollars.  Finally  Mendenhall  failed,  owing  the  plaintiffs 
on  account  of  such  sales  the  amount  sued  for.  It  may  be  well' 
doubted  whether  an}'  question  of  interpretation  of  the  said  under- 
taking properly  arises  on  the  abstract  of  the  record  before  us, 
and  at  which  alone  we  can  look.  But,  \\aiving  the  consideratibn  of 
that  question  for  the  present,  we  may  .state  that  it  appears  to  us 
that  if  we  interpret  the  language  of  the  said  undertaking  in  the 
light  of  a  knowledge  of  the  relation  of  the  parties,  their  antecedent 
acts,  and  of  the  subject-matter  of  the  same,  as  we  have  the  right 
to  do;  2  Parsons  on  Contracts  [7  Ed.]  top  p.  564:  Edivards  v. 
Smith .  Adm'r,  63  Mo.  119;  Bnnce,  Adm'r,  v.  Bick's  Ex'r,  43  Mo. 
266 ;  Hutchinson  v.  Bowkcr,  5  Mees.  &  W.  535 ;  Black  River 
L.  Co.  V.  Warner,  03  Mo.  374,  it  l)ecomes  quite  obvious  that  it 
cannot  be  held  to  be  a  continuing  one,  and  this,  too,  in  view  of 
the  maxim,  verba  ■fortius  accipiuntur  contra  proferentem.  It  is 
held  in  this  state  that  when  it  is  dou1)tful  from  the  language  con- 
tained in  the  contract,  whether  the  guaranty  was  for  a  single  deal- 
ing or  a  continuous  one,  the  trtie  principle  of  sound  ethics  is  not 
to  set  up  a  presumption  for  or  against  the  guarantor,  bitt  to  give 
the  contract  the  sense  in  which  the  person  making  the  promise 
believed  the  other  party  to  have  accepted  it.  if,  in  fact,  he  did 
accept  it.  Boeline  et  al.  v.  Murphy,  46  Mo.  57;  Shine's  Adm'r 
V.  Bank,  70  Mo.  524.  Extrinsic  evidence  cannot  be  received  to 
contradict,  add  to,  subtract  from  or  vary  the  terms  of  a  guaranty, 
but,  as  has  been  stated,  when  its  meaning  is  doul)tful,  or  obscurely 
expressed,  parol  testimony  in  relation  thereto,  recjuisite  to  a  clear 
understanding  of  its  purport,  is  admissible.  The  very  language 
of  the  instrument  sued  on  negatives  the  idea  that  it  was  intended 
to  be  a  continuing  guaranty.     When  the  relation  of  the  parties, 


HENRY    m'SHANE    CO.    VS.    PADTAN.  89 

-and  the  circumstances  under  which  the  guaranty  in  question  was 
entered  into,  are  considered,  its  meaning  hecomes  quite  apparent. 
The  fact  that  plaintiffs  had  .sold  Mendenhall  goods  amounting  to 
thirteen  hundred  dollars,  and  that  they  would  not  deliver  the 
same  to  him  without  defendant  would  guarantee  the  payment 
thereof,  coupled  with  the  further  fact  that  this  amount  was  in- 
serted in  the  instrument,  for  which  defendant  bound  himself  for 
"bills  as  they  mature,  purchased" — not  to  be  purchased — con- 
x:lusively  shows  that  the  transaction  and  undertaking  related  solelv 
and  entirely  to  the  unfilled  order,  or  orders,  for  goods  plaintiff 
had  received  of  Mendenhall,  at  the  time  of  the  execution  of  the 
contract,  and  not  to  subsequent  sales  and  purchases.  We  think- 
that  upon  die  record  before  us  die  judgment  of  the  circuit  court 
was  for  the  right  part)-.  The  exceptions  to  the  rulings  of  the 
court  in  respect  to  the  introduction  of  evidence  were  not  preserved 
by  a  motion  for  a  new  trial,  as  appears  by  the  abstract.  But, 
whether  this  is  so  or  not,  it  is  quite  evident  that  none  of  these 
adverse  rulings  of  the  court  to  the  plaintiff's  materially  affected 
the  merits  of  the  case.  Indeed,  the  plaintiff's,  in  their  brief,  make 
no  point  in  respect  to  that  matter. 

The    judgment,    with    the    concurrence    of    Judge    Ellison, 
Judge  Gill  not  sitting,  will  be  affirmed. 


Henry  McShane  Co.,  L't'd.,  vs.  Padian  (1894). 
142  N.  Y.  207;  36  N.  E.  880. 

Appeal  from  common  pleas  of  New  York  city  and  county, 
general  term. 

Action  by  the  Henry  McShane  Company,  Limited,  against 
William  Padian.  From  a  judgment  of  the  general  term  affirm- 
ing a  judgment  for  defendant,  plaintiff  appeals.     Reversed. 

Tlios.  C.  Eiuiever,  for  appellant. 
IVilliaiii  J.  Fanning,  for  respondent. 

Bartlett,  J.  The  plaintiff'  seeks  to  recover  of  the  defend- 
ant upon  the  following  guaranty:  "I,  William  Padian,  hereby 
guaranty  to  the  Henry  McShane  Company,  Limited,  the  payment 


90  GUARANTY  AND  SURKTVSHIP. 

by  John   1'.  Wiegers,  plumber,  to  them  for  any  and  all  materials 
which  they  may  deliver  to  John   P.  Wiegers,   I  not  to  be  liable 
for  any  balance  exceeding  five  hundred  dollars   which   may  be- 
come due.     William   Padian.     Witness:   Wm.   H.   Barth.     Dated 
New  York,  March  31st,  '00."  This  case  was  tried  before  a  referee, 
who  held  that  the  guaranty  was  susceptible  of  two  constructions^ 
and  admitted,   to  quote   from  his  opinion,  "oral  evidence  of  the 
res  gestae  so  as  to  arrive  at  the  probable  intention  of  the  parties." 
The  evidence  was  admitted  against   the  objection  and  exception 
of  plaintiff.     Upon  conflicting  evidence,  the   referee   found,   sub- 
stantially, that  the  guaranty  had  reference  to  certain  goods  sold 
by  plaintiff"  to  John  P.  Wiegers,  to  be  used  in  the  performance 
of  a  contract  named,  and  that,  before  the  commencement  of  this 
action,  Wiegers  had  paid  for  them.      He  further  found  that  said 
guaranty  was  not  intended  In-  the  parties  thereto  as  a  running  or 
continuing  guaranty,  other  than  for  the  goods  already  referred  to, 
and  dismissed  the  complaint,  with   costs.     The  general  term  of 
the  court  of  common  pleas  for  the  city  and  county  of  New  York 
affirmed  a  judgment   for  the  defendant  entered  upon  the  report 
of  the  referee.     The  question  presented  on  this  appeal  is  whether 
the  language  of  the  guaranty  is  so  ambiguous  as  not  to  furnish 
conclusive  evidence  of  its  meaning,  and  entitles  the  defendant  to 
prove  the  circumstances  under  which  it  was  executed,  so  that  the 
court  can  construe  it  in  the  light  of  all  the  facts.     If  this  anil)iguity 
exists,  the  evidence  of  the  circumstances  surrounding  the  execu- 
tion of  this  guaranty  was  properly  admitted  (Bank  v.  Kaufman,  93 
N.  Y.  281,  and  cases  cited;  Bank  v.  Mylcs,  73  N.  Y.  341),  and, 
as  the  findings  of  the  referee  were  made  on  conflicting  evidence, 
they  are  not  reviewal)le  in  this  court  {Shcncood  v.  Hauser,  94  N. 
Y.  626:  Fire  Department  of  Nczc  York  v.  Atlas  S.  S.  Co.,   106 
X.  Y.  578,  13  N.  E.  329;  Crim  v.  Starkzveather,  136  X.  Y.  635.  32 
X\  E.  701  ).     We  are.  however,  unable  to  agree  with  the  learned 
court  below  in  its  construction  of  this  guaranty.     We  regard  its 
language  as  clear,  presenting  no  ambiguity,  and  as  creating  a  con- 
tinuing guaranty,  which,  by  its  terms,  limits  defendant's  liability 
to  any  balance,  not  exceeding  $500,  which  may  become  due,  but 
does  not  undertake  to  regulate  the  amount  of  John   \\  Wiegers' 
future  tran.sactions  with  the  plaintiff'.     The  cases  are  numerous, 
construing  instruments  of  this  character,  and  it  is  not  always  an 
easv  task  to  determine  on  which  side  of  the  line  separating  con- 
tinuous from  limited  ]ial)ililv  iItcv  belong.     In  Whitney  v.  Groot, 


HENR^'    M  SHANE    CO.    VS.    I'ADIAN. 


91 


24  Wend.,  at  page  84,  Chief  Justice  Nelson  remarks:  '"It  is,  in 
most  of  these  cases,  a  nice  and  difficult  question  to  determine 
whether  the  guaranty  is  a  continuing  one  or  not.  The  intent  of 
the  party,  to  be  derived  from  the  words,  is  the  only  sure  guide ;  and 
therefore  very  little  aid  is  to  be  derived  from  the  adjudged  cases, 
as  they  turn  upon  the  peculiar  phraseology  of  the  guaranty."  In 
Bank  V.  Mylcs,  73  N.  Y..  at  page  341,  Judge  Earl  says:  "Pre- 
cedents do  not  help  much  in  the  construction  of  such  instruments." 
In  Gates  v.  McKcc.  13  N.  Y.,  at  page  234,  Judge  Denio  says:  "The 
cases  are  not  entirely  harmonious  as  to  the  principles  of  construc- 
tion which  ought  to  govern  in  this  class  of  cases,  but  the  weight  of 
authority  is  altogether  in  favor  of  construing  guaranties  by  rules 
at  least  as  favorable  to  the  creditor  as  those  which  courts  apply  to 
other  written  instruments,  irrespective  of  the  consideration  that 
the  guarantor  is  a  surety."  In  the  leading  English  case  of  Mason 
V.  Pritchani.  12  East,  227,  the  court  said  the  words  were  to  be 
taken  as  strongly  against  the  party  giving  the  guaranty  as  the  sense 
of  them  would  admit.  The  supreme  court  of  the  United  States  has 
also  expressed  the  same  views.  Drninmond  v.  Frcstiiiaii,  12  Wheat. 
515;  Douglass  V.  Reynolds,  7  Pet.  113,  122;  Laivrence  v.  McCal- 
nwnt,  2  How.  426. 

Applying  these  principles  to  the  guaranty  now  under  con- 
sideration, it  leads  to  the  construction  we  have  already  indicated. 
The  usual  and  ordinary  import  of  its  language  discloses  an  intent 
on  the  part  of  the  defendan*^  to  guaranty  the  purchases  of  Wiegers 
from  plaintiff  of  any  and  ail  materials,  provided  his  liability  was 
not  to  exceed  $500.  or  any  balance  which  might  become  due.  To 
place  upon  this  instrument  the  construction  contended  for  by 
defendant  is  to  ignore  its  plain  provisions,  and  import  into  the  case 
an  entirely  new  contract.  The  defendant  contends  he  was  only 
guarantying  payment  of  $395  worth  of  specific  materials  which 
were  to  be  used  in  the  performance  of  a  certain  building  contract. 
On  the  other  hand,  the  plaintiff  states  that  Wiegers  was  a  young 
man  starting  in  business,  and  it  was  customary  to  require  a  guar- 
anty in  such  cases.  The  evidence  in  the  case  shows  that  Wiegers, 
after  the  execution  of  the  guaranty,  made  purchases  of  plaintiff 
aggregating  between  six  and  seven  thousand  dollars,  and  made 
payments  of  between  four  or  five  thousand  dollars,  and  owed  plain- 
tiff a  balance  of  twenty-two  hundred  dollars  when  this  action  was 
commenced.  Wc  hold,  however,  that  parol  evidence  was  inad- 
missible as  to  surrounding  circumstances  to  aid  in  construing  this 


92  GUARANTY    AND    SURETYSHIP. 

guaranty,  and  rest  our  (iecision  upon  the  language  of  the  instru- 
ment solely.  The  answer  of  the  defendant  alleges  that  he  was 
induced  to  sign  the  guaranty  by  the  false  and  fraudulent  repre- 
sentations of  plaintiff,  made  tlirough  its  agents.  The  proof  failed 
to  establish  this  defense,  and  tlu^  referee  made  no  such  finding. 
The  judgment  appealed  from  must  be  reversed,  and  a  new  trial 
ordered,  with  costs  to  abide  tlie  event.  All  concur. 
Judginent  reversed. 


Ar.BOTT  Tx  Browx  (1889), 
131   III.  108,  22  X.  E.  813. 

Ap]H'al  from   Appellate  Court.  I'^irst  District. 

AssiM  r.sn-  by  1  lenry  G.  Abbott  against  John  B.  Brown.  The 
circuit  court  rendered  judgment  for  defendant,  and  the  appellate 
couri  aflirmed  the  judgment.     Plaintiff  appeals. 

Osborne  Bros.  &■  Biirgctt,  for  a])pellant. 

Osbitni  &  Lyiulc,  for  appellee. 

CuAic,  J.  On  the  ist  day  of  July,  1876,  Kirk  B.  Xewell, 
being  indebted  to  H.  G.  Abbott,  the  a])pellant,  executed  his  prom- 
issory note  as  follows : 

"Chicago,  Ills.,  July  i,  1876. 
"One  day  after  date  I  promise  to  pay  to  the  order  of  H.  G.  Abbott 
two  thousand  dollars,  with  interest  at  the  rate  of  ten  per  cent,  per  annum, 
at  First   National  Bank   of  Chicago.     Value  received. 

(Signed)  "Kirk  B.  Newell." 

Indorsed  on  the  back  of  the  note  was  the  following  guaranty: 

"For  value  received,.  I  hereby  guaranty  tlie  payment  of  the  within 
'note  at  maturity,  or  at  any  time  thereafter,  with  interest  at  ten  per  cent, 
per  annum  until  paid,  and  agree  to  pay  all  costs  and  expenses  paid  or 
incurred  in  collecting  the  same,  including  attorney's  fees. 

(Signed)  "J.  B.  Brown." 

This  action  was  brought  by  H.  G.  Abbott  against  Brown  to 
recover  certain  costs  and  attorney's  fees  which  he  paid  out  and 
expended  in  the  collection  of  the  amount  named  in  the  note  in  an 
action  against  Brown  on  his  guaranty.  The  costs  and  attorney's 
lees  which  the  plaintiiT  sought  to  recover  in  the  action  were  not 


ABBOTT  VS.    BROWN.  93^    , 

expended  in  attempting  to  collect  the  note  which  was  executed  by 
Kirk  B.  Newell.  No  suit  was  ever  brought  on  the  note  against 
the  maker,  nor  was  any  evidence  offered  to  prove  that  any  costs 
or  expenses  were  ever  incurred  in  an  attempt  to  collect  the  note. 
But  on  the  trial  of  the  cause  Abbott,  who  is  appellant  here,  put  in 
evidence,  showing  that  on  July  3,  1882,  he  brought  an  action  in 
assumpsit  against  Brown  "on  the  guaranty  signed  by  him.  indorsed 
on  the  note,  whereby  he  guarantied  payment  of  the  note,"  in  which 
he  recovered  judgment  for  the  amount  due  on  the  note,  $3,338.34; 
that  an  appeal  was  taken  by  Brown  to  the  appellate  court,  and 
to  the  supreme  court  from  the  judgment  of  the  appellate  court 
atfirming  the  judgment  of  the  circuit  court,  and  that  upon  the 
affirmance  thereof  by  the  supreme  court  Brown  paid  appellant  the 
amount  of  the  judgment;  that  the  firm  of  which  witness  was  a 
member  was  employed  as  attorneys  to  conduct  this  action,  and  ren- 
dered services  therein  of  the  value  of  $1,500.  and  they  had  been  paid 
that  sum  by  appellant  for  said  services ;  and.  also,  in  the  prosecution 
of  this  action,  appellant  expended  for  printing  and  other  neces- 
sary expenses  the  sum  of  $26.  On  this  evidence  the  circuit  court 
held,  as  a  matter  of  law,  "that  the  guaranty  on  which  this  suit 
was  brought  is  not  an  agreement  to  pay  the  costs  or  expenses  or 
attorney's  fees,  paid  or  incurred  in  a  suit  against  Brown  upon 
said  guaranty,"  and  rendered  judgment  for  the  defendant. 

There  is  no  ambiguity  in  the  contract  of  guaranty  executed 
by  Brown.  The  terms  of  the  contract  are  plain  and  easily  under- 
srood.  By  the  contract  Brown  agreed  that  the  note  should  be 
paid  with  interest  at  ten  per  cent,  and  he  also  agreed  to  pay  all 
costs  and  expenses  incurred  or  paid,  including  attorney's  fees,  in 
collecting  the  note.  Obviously  the  meaning  of  the  language  used 
was,  if  costs  and  expenses  and  attorney's  fees  were  incurred  in 
the  collection  of  the  note  and  interest  from  the  maker,  then  such 
costs,  expenses,  and  attorney's  fees  should  be  paid  by  i5rown.  If 
the  contract  of  Newell,  the  maker  of  the  note,  and  the  contract  of 
guaranty  by  Brown,  was  but  one  contract,  the  position  of  appel- 
lant that  the  action  on  the  guaranty  was  an  action  on  the  note 
might  be  regarded  more  plausible ;  but  such  is  not  the  case.  Dan- 
iel, Neg.  Inst.  §  1752,  defines  a  contract  of  guaranty  as  fol- 
lows :  "A  'guaranty'  is  defined  to  1:>e  a  promise  to  answer  for  the 
payment  of  some  debt  or  the  performance  of  some  duty  in  case 
of  the  failure  of  another  person  who  is  in  the  first  instance  liable 
to  such  payment  or  performance."    2  Pars.  Cont.  3.  says :  "Guar- 


94  GUARANTY    AXl)    SIKKTVSH  1 1'. 

antv  is  luld  to  l)e  tb.c  contract  l)y  which  one  person  is  l)onn(l  to  an- 
other for  the  (hie  fnhilhnent  of  a  promise  or  engagement  of  a  third 
party."  Story,  from.  Xotes,  §  457,  says:  "A  guaranty,  in  its 
legal  and  commercial  sense,  is  an  undertaking  by  one  person  to  be 
answerable  for  the  payment  of  some  debt,  or  the  due  performance 
of  some  contract  or  duty,  by  another  person,  who  himself  remains 
liable  to  pay  or  perform  the  same.'"  In  fJickcrsoii  v.  Dcrricksuii,  39 
111.  574,  this  court,  in  speaking  of  a  guaranty,  says :  "The  contract 
of  an  absolute  guaranty  is  that  if  the  principal  fails  to  pay,  the  guar- 
antor will.  If  it  were  not  so.  it  would  not  be  a  guaranty,  but  an  in- 
dependent undertaking."  Sec,  also.  Rich  v.  Hatluncay.  18  111.  548. 
Here,  Newell,  as  maker  of  the  ])romissory  note,  agreed  to  pay  a 
certain  sum  of  money  at  a  certain  time.  r>y  his  contract  he  be- 
came liable  on  the  note;  but  LJrown.  as  guarantor,  was  not  liable 
with  him.  No  joint  liability  existed.  In  liaylies.  Sur.  389,  the 
author  says:  "In  an  action  to  enforce  a  contract  of  guaranty  the 
guarantor  is  the  proper  party  defendant,  and  the  principal  debtor 
should  not  be  joined.  As  has  l)een  shown,  all  the  parties  to  a 
contract  of  suretyship  may  be  joined  as  defendants;  but  a  guar- 
antor cannot  be  sued  with  his  ])rincii)al.  for  his  engagement  is 
strictly  an  individual  contract,  and  not  an  engagement  jointly 
with  his  principal." 

Here  Urown's  engagement  as  guarantor  was  his  individual 
contract,  under  which  he  ])ecame  b(nnul  to  pay  in  case  the  maker 
of  the  note  failed  to  do  so.  When  the  maker  of  the  note  failed 
to  pay  at  maturity  of  the  instrument,  the  guarantor  then,  and  not 
before,  became  lial)le,  on  his  c(»ntracl  of  guaranty,  to  an  action. 
The  liabilitv  of  the  maker  of  tlie  note  and  the  guarantor  were 
separate  and  distinct.  To  enforce  the  liability  of  the  maker  an 
action  should  be  brought  on  the  note  against  him.  while  to  enforce 
the  lialiilitv  of  the  guarantor  an  aclum  could  <inly  ])e  brouglu  on 
the  contract  of  guaranty;  and  it  seems  ])lain  that  an  agreement  to 
pay  costs  and  attorney's  fees  wliicli  might  l)e  incurred  in  one  action 
does  not  include  costs  and  attorney's  fees  incurred  in  the  other. 
Here  r.nnvn.  l)y  the  terms  of  his  guaranty.  l)ound  himself  to  i)ay 
costs  and  exjjenses.  including  attorney's  fees,  which  might  be  in- 
curred in  an  action  to  collect  the  note,  but  he  saw  proper  not  to 
agree  to  pay  such  costs  and  expenses  as  might  be  incurred  in  an 
action  brought  on  the  contract  of  guaranty;  and  in  the  absence  of 
such  an  agreement  we  are  aware  of  no  i)rincii)le  which  would  make 
him    lial)le.      I  lad   a   suit    l)een    broughi    on    the   note   against   the 


m'.m[Jrrav  vs.   noyes.  95 

maker,  nnder  the  contract  of  guaranty.  Brown  would  have  been 
liable  for  such  costs  and  expenses,  including  attorney's  fees,  as 
might  have  been  incurred  in  that  action  ;  Ijut  no  such  action  was 
brought,  and  there  has  been  no  breach  of  his  contract  so  far  as 
costs  and  expenses  are  concerned. 

One  other  question  remains  to  be  considered :  ( )n  the  trial 
the  appellant  offered  to  show  that  he  employed  counsel  to  "watch 
Brown  from  1878  to  1882,  and  the  business  operations  in  which 
he  was  engaged,  to  see  wdien  there  was  a  reasonable  prospect  for 
collecting  the  note  out  of  him."  Also  that  in  April,  May,  June, 
and  July,  1882,  his  attorney  had  negotiations  wddi  B)rown  for  the 
settlement  of  his  liability  on  the  guaranty  for  which  the  services 
of  counsel  were  worth  $50,  and  which  sum  appellant  had  paid.  As 
to  those  services  the  appellate  court  held  if  they  were  a  proper 
charge  against  appellee,  they  should  have  been  included  in  the 
former  suit.  We  concur  in  the  view  of  the  appellate  court,  if  any 
liabilitv  existed  for  those  services,  as  they  had  been  rendered  be- 
fore appellee  was  sued  on  the  guaranty,  they  should  have  been  em- 
braced in  that  action.  The  judgment  of  the  appellate  court  will 
be  affimied. 


McMuRR..v  ct  al.  vs.  Noves  (1878). 
72  N.  Y.  523. 

Esck  Cozceii,  for  appellant. 
Irving  Brozoie,  for  respondent. 

Rappallo.  J.  The  guaranty  on  which  this  action  is  brought  is 
contained  in  an  assignment  of  a  bond  and  mortgage,  and  is  in  the 
following  form : 

"I  hereby  covenant  *  *  *  that  in  case  of  foreclosure  and  sale  of  the 
mortgaged  premises  described  in  said  mortgage,  if  the  proceeds  of  such 
sale  shall  be  insufficient  to  satisfy  the  same,  with  the  costs  of  foreclosure, 
I  will  pay  the  amount  of  such  deficiency  to  the  said  party  of  the  second 
part,  or  its  assigns,  on  demand." 

On  the  part  of  the  appellants,  it  is  contended  that  this  guar- 
anty is  subject  to  the  rtdes  applicable  to  guaranties  of  collection, 
and'  thus  laches  in  foreclosing  the  mortgage,  after  default,  is  a 
defense.     The  respondents  insist  that  it  is  a  guaranty  of  payment, 


96  C.IAKAXTV    AND    STRKTYSH 1  1'. 

and  that  the}  were  niuic?-  no  ohhgation  to  use  dihgencc  in  endeav- 
oring to  coUeel  tlie  mortgage  debt  by  foreclosure. 

The  fundamental  distinction  between  a  guaranty  of  payment 
and  one  of  ollection  is.  that  in  the  first  case  the  guarantor  under- 
takes unconditionally  that  the  debtor  will  pay,  and  the  creditor 
may,  upon  default,  proceed  directly  against  the  guarantor,  without 
taking  any  steps  to  collect  of  the  principal  debtor,  and  the  omission 
or  neglect  to  proceed  against  him  is  not  (except  under  special  cir- 
cumstances) any  defense  to  the  guarantor;  while  in  the  second  case 
the  undertaking  is  that  if  tlie  demand  cannot  be  collected  by  legal 
proceedings  the  guarantor  will  pay,  and  consequently  legal  pro- 
ceedings against  the  principal  debtor,  and  a  failure  to  collect  of 
him  by  those  means  are  conditions  precedent  to  the  liability  of  the 
guarantor ;  and  to  these  the  law,  as  established  by  numerous  deci- 
sions, attaches  the  further  condition  that  due  diligence  be  exercised 
by  the  creditor  in  enforcing  his  legal  remedies  against  the  debtor. 

These  rules  are  well  settled  and  are  not  controverted,  and  the 
only  question  is  to  which  class  of  guaranties  the  one  now  before 
us  belongs. 

It  is  apparent  upon  the  face  of  the  instrument  that  the  under- 
taking of  the  defendant  was  not  an  unconditional  one  that  the 
mortgagor  should  pay,  or  that  the  guarantor  would  pay  on  default 
of  the  mortgagor,  but  only  that  the  guarantor  would  pay,  in  case 
of  a  deficiency  arising  on  a  foreclosure  and  sale.  The  foreclosure 
and  sale  were  consequently  conditions  precedent,  and  the  general 
principle  is,  that  wherever  a  condition  precedent  is  to  be  performed 
for  the  purpose  of  establishing  the  liability  of  a  surety  or  guaran- 
tor, such  condition  must  be  performed  in  good  faith  and  with  due 
diligence.  It  is  upon  this  principle  that,  in  case  of  a  guaranty  of 
collection,  diligence  is  required  of  the  creditor. 

1  am  unable  to  see  why  this  principle  is  not  applicable  to  the 
guaranty  now  in  controversy.  The  respondents  claim  that  it  is  an 
undertaking  to  pay  any  deficiency  which,  may  arise,  and  is.  there- 
fore, a  guaranty  of  ])ayment  of  the  mortgage  debt  to  that  extent, 
and  to  be  governed  by  the  same  rules  as  if  it  had  been  a  guaranty 
of  payment  of  the  whole  mortgage.  But  the  fallacy  of  this  reason- 
ing is  that  it  is  not  an  unconditional  guaranty  that  the  mortgagor 
will  pay  the  mortgage  debt,  or  any  part  of  it,  but  only  that  after 
the  remedy  again.st  the  land  has  been  exhausted,  and  the  deficiency 
ascertained  bv  foreclosure  and  sale,  the  guarantor  will  pay  such 
deficiencY-     'I'be   only   difference   between   this   and   an   ordinary 


m'murp.ay  vs.  noyes.  97 

guaranty  of  collection  is,  that  in  the  latter  case  the  undertaking  is 
that  after  it  has  been  ascertained  by  all  such  legal  proceedings  as 
the  case  admits  of,  that  the  demand  cannot  be  collected,  the  guar- 
antor will  pay ;  while  in  the  present  case  the  only  proceedings  which 
the  creditor  is  bound  to  adopt  are  a  foreclosure  of  the  mortgage  and 
sale  of  the  mortgaged  lands.  To  that  extent  the  condition  prece- 
dent exists  alike  in  both  cases,  and  the  duty  of  exercising  due  dili- 
gence attaches,  there  being  nothing  in  the  instrument  qualifying 
or  dispensing  with  it. 

The  case  of  Goldsmitli  v.  Bvowu  (  35  Barl).  484)  is  relied  upon 
by  the  respondents  as  sustaining  their  position.  In  that  case  the 
covenant  was,  as  construed  by  the  court,  to  pay  the  deficiency  upon 
the  mortgage  debt  ichcuczrr  the  remedy  against  the  lands  mort- 
gaged should  have  l)een  exhausted  and  the  deficiency  ascertained. 
The  decision  in  that  case  can  only  be  sustained  by  construing  the 
covenant  as  waiving  diligence  in  foreclosing,  and  binding  the  cov- 
enanter to  ]3ay  the  deficiency  without  regard  to  the  time  of  the  fore- 
closure. Nothing  in  the  covenant  now  vmder  examination  has  any 
relation  to  the  time  of  the  foreclosure,  or  can  be  construed  as  waiv- 
ing diligence  required  by  the  general  rules  of  law  in  performing 
the  condition. 

The  delay  in  foreclosing  in  the  present  case  was  fourteen 
months  after  the  mortgage  debt  became  due.  During  upward  of 
ten  months  of  this  time  the  property  was  a  sufficient 'security,  but 
afterward  the  buildings  thereon  were  destroyed  by  fire,  and  the 
value  was  reduced  below  the  amount  of  the  mortgage  debt.  It 
cannot  be  questioned  that  this  delay  was  sufficient  to  constitute 
laches.  In  Craig  v.  Parkis,  40  N.  Y.  181,  a  delay  of  six  months 
in  foreclosing  a  bond  and  mortgage  was  held  to  l^e  laches  which 
discharged  a  guaranty  of  its  collection. 

The  judgment  should  be  reversed,  and  a  new  trial  ordered, 
with  costs  to  abide  the  event.    All  concur. 

Judgment  reversed. 


98  guaranty  and  suretyship. 

Roberts  z's.  Hawkins   (1888). 
70  Mich.  566 :  38  X.  W.  575. 

Mrror  to  Superior  Court  of  Grand  Rapids.     Assumpsit. 

Norris  &■  Xorris,  for  appellant. 

/.  C.  FitcGcrald  {Charles  Chandler,  of  counsel),  for  plaintiff. 

Long,  J.  January  \2,  1884,  one  Lyman  D.  Follett  made  his 
promissory  note  as  follows: 

"$1,000. 

Grand  Rapids,  Mich.,  January  12,  1884. 
One  year  after   date,   I    promise   to   pay   to   the   order  of   Helen   M. 
Roberts  one  thousand  dollars,  with  interest  at  eight  per  cent,  per  annum. 
Value  received.  Lyman  D.  Follett." 

xA.nd  defendant  signed  an  indorsement  on  the  back  thereof, 
as  follows : 

"For  value  received,  I  hereby  guarantee  the  payment  of  the  within 
Value  received.  L.  E.  Hawkins." 

On  the  delivery  of  this  note  to  plaintiff',  she  paid  Follett 
$1,000.  January  8,  1885,  seven  days  before  this  note  became  due, 
Follett  paid  one  year's  interest ;  and  neither  at  that  time,  nor  at 
the  maturity  of  the  note,  was  the  same  presented  to  Follett  or 
defendant  for  payment.  No  notice  of  non-payment  was  given 
defendant  then  or  at  any  time  prior  to  June  8,  1887.     January  15, 

1886,  Follett  paid  the  interest  for  the  next  year,  and  January  17, 

1887,  for  the  year  following.  About  June  8,  1887,  the  note  being 
then  two  years  and  five  months  overdue,  it  was  first  presented  to 
defendant,  and  payment  demanded  and  refused.  August  13  this 
suit  was  brought. 

( )n  the  trial,  plaintiff",  having  proved  the  note  and  guaranty, 
and  its  non-payment,  rested.  Defendant  then  sought  to  make  his 
defense  as  pleaded,  and  offered  to  show — 

1.  That  he  was  an  accommodation  guarantor,  without  con- 
sideration or  security. 

2.  That,  at  or  about  the  maturity  of  the  note,  he  inquired  of 
the  maker  of  the  note  if  it  was  paid,  and  was  told  it  was. 

3.  That  neither  at  the  maturity  of  the  note,  nor  at  any  sub- 
sequent time,  prior  to  June  8,   1887,  was.  any  notice  of  the  non- 


ROBERTS   VS.    HAWKINS.  99 

payment  of  this  note  given  to  defendant,  nor  any  demand  made 
on  him  for  the  payment  thereof. 

4.  That  at  tlie  maturity  of  this  note,  and  for  some  consider- 
able time  thereafter — at  least  a  year — P'oUett,  the  maker  of  the 
note,  was  solvent,  and  had  property  out  of  which  defendant  could 
have  procured  him  to  pay  the  note  or  obtained  security. 

5.  That  when  defendant,  on  June  8,  1887,  learned  of  the  non- 
payment of  this  note,  the  maker  was  insolvent,  out  of  the  jurisdic- 
tion, and  that  he  could  then  obtain  no  security  or  payment. 

The  court  directed  a  general  verdict  for  plaintiff  on  all  the 
counts  of  the  declaration.  Judgment  being  entered  on  the  verdict 
in  favor  of  plaintiff'  for  the  amount  of  the  note  and  interest, 
defendant  brings  the  case  into  this  Court  by  writ  of  error. 

The  declaration  contains  three  counts.  The  first  alleges  the 
^  guaranty,  demand  of  the  maker  at  maturity,  non-payment,  and 
g^  notice  of  said  demand  and  non-payment  to  defendant  at  maturity. 
^  The  second   alleges  the  guaranty,   the  refusal  by  maker  to 

^      pay  at  maturity,  and  notice  to  defendant,  at  maturity,  of  maker's 
;bt)      refusal. 

g|  The  third  is  the  common  counts  in  assumpsit,  with  copy  of 

j2      note  annexed,  and  an  alleged  indorsement  on  back  of  L.  E.  Haw- 
^       kins,  without  any  guaranty  over  it. 

The  plea  is  the  general  issue,  with  notice  of  the  defense  of 
release  by  plaintiff's  failure  to  give  notice  of  non-payment  to 
defendant,  and  the  consequent  damage  and  loss  to  him  thereby. 

It  is  claimed  that  the  court  erred  in  receiving  the  note  and 
guaranty  in  evidence  under  the  third  count  in  plaintiff's  declara- 
tion, for  the  reason  that  the  note  and  guaranty  offered  were  not 
the  note  and  guaranty  set  forth  in  that  count ;  that  the  contract  set 
out  in  plaintiff's  third  count  was  that  defendant  had  indorsed  his 
name  in  blank  on  the  back  of  the  note,  not  payable  to  his  order; 
and  that  this  would  make  him  a  maker  of  the  note,  and  liable  as 
such,  while  the  note  offered  had  a  guaranty  of  payment  indorsed 
thereon.  Defendant  claimed  that  this  was  a  variance,  and  that 
the  court  should  have  excluded  the  guaranty  under  this  third 
count,  and  confined  the  verdict  to  a  recovery  under  the  first  two 
counts. 

As  we  view  the  case,  however,  this  objection  has  no  force. 
The  plaintiff  being  entitled  to  recover  under  the  first  and  second 
counts  of  the  declaration,  the  defendant  was  not  prejudiced  in  the 


100  GUARANTY  AXD  SURKTVSITIP. 

course  taken  by  the  court  in  not  witlidrawintj  all  consideration  of 
the  case  under  the  third  count.  The  declaration  was  sufficient 
in  the  first  two  counts  to  allow  a  recoverv  thereunder. 

The  chief  error  complained  of  is  the  exclusion  of  the  entire 
defense,  and  the  direction  of  a  verdict  for  plaintiff.  On  the  trial 
the  plaintiff  proved  by  a  witness  the  application  for  the  loan,  the 
loaning  of  the  money,  the  giving-  of  the  note  and  guaranty,  and, 
after  reading  the  note  and  guaranty  in  evidence,  rested.  The 
defendant  was  then  called  and  sworn  as  a  witness  in  his  own 
behalf,  and  was  asked  by  his  counsel: 

"Q.  \\  lu'ii  that  nolc  became  chio.  in  January,  1885, — January  15, — 
was  any  notice  given  you   of  ihe  fact   tliat   it    remained  unpaid?" 

To  this  question  counsel  for  plaintiff'  objected,  that  the  same 
was  irrelevant  and  immaterial ;  that  the  defendant  was  not  an 
indorser  nor  guarantor  of  collection,  htit  of  ])ayiiieiit  of  the  note. 

Counsel  for  the  defendant  then  offered  to  show  b\-  the  witness 
that  he  had  no  notice  of  the  non-jjayment  of  the  note  prior  to 
June  8,  1X87;  that  he  was  an  accomiuodation  guarantor  without 
securit}- ;  that,  at  or  near  the  maturity  of  the  note,  he  incpiired 
of  the  maker,  and  was  infonued  tliat  it  was  paid  ;  that,  at  the  time, 
the  maker  of  the  note  was  solvent,  and  for  some  considerable  tiiue 
thereafter — probably  a  year — and  that  the  defendant  could,  if  he 
had  any  knowledge  of  its  non-payment,  have  secured  himself,  or 
procured  the  maker  to  pay  it :  that,  when  the  defendant  learned 
of  the  non-payment  of  the  note,  the  luaker  was  insolvent,  and  out 
of  the  State,  and  no  security  could  have  been  ol)taine(l  ])y  the 
defendant ;  the  counsel  then   saving — 

"That  this,  of  course,  is  tlie  line  of  defense  marked  out  by  the  notice 
in  the  pleadings.  It  is  all  covered  by  my  brother's  argument ;  and,  if  we 
have  no  right  to  show  that  defense,  then,  of  course,  there  remains  nothing 
but  for  the  court  to  direct  a  verdict  for  the  amount  of  the  note,  and 
interest." 

The  court  sustained  the  objection,  and  directed  a  xerdict  for 
plaintiff'. 

In  considering  the  case,  the  defendant's  offer  to  jirove  tliis 
state  of  facts  must  be  taken  as  true.  Clay,  etc.,  Lis.  Co.  v.  Manu- 
facturing Co.,  31  Mich.  356.  Under  this  offer  by  the  defendant, 
the  issue  is  made :  Is  a  person  not  being  a  party  to  a  jiromissory 
note,  who  at  its  date  and  before  delivery,  and  for  the  purpose  of 
having  a  loan  made  upon  the  strength  of  his  guaranty,  guarantees 


ROBERTS    \'.S.    I  TAW  KINS.  101 

the  payment  of  such  note,  hahle  thereon  in  case  the  note  is  not 
paid  at  niatnrit\-,  without  notice  of  non-payment  having  heen 
given  to  lum  by  the  holder  at  the  maturity  of  the  note,  or  within 
a  reasonable  time  thereafter ;  or  in  case  notice  is  not  given,  and 
no  proceedings  taken  to  collect  the  note  from  the  maker,  and  the 
maker  of  the  note,  at  the  maturity  thereof,  was  solvent,  and  sub- 
sequently, and  before  suit  is  brought  on  the  guaranty,  becomes 
insolvent,  can  such  guarantor,  when  such  action  is  brought  against 
him,  set  up  such  insolvenQv  as  a  defense?  The  defense  being 
based  on  plaintiff's  laches  in  not  giving  notice  to  the  defendant 
of  the  non-payment  of  this  note  at  maturity,  and  the  consequent 
damage  to  defendant  thereby,  the  correctness  of  the  court's  ruling 
depends  on  whether  or  not  there  rested  on  the  plaintiff'  the  duty 
to  give  such  notice  under  any  circumstances. 

The  defendant  claims  that  his  liability  existed  only  on  the 
hap|>ening  of  a  contingency  and  the  performance  of  a  condition ; 
that  wdiether  or  not  that  contingency  happened,  or  condition  was 
performed,  was  matter  peculiarly  within  the  knowledge  of  the 
plaintiff',  and  not  within  his  own ;  and  that  if  plaintiff'  intended  to 
assert  the  performance  of  the  condition,  or  the  happening  of  the 
contingency,  whereby  alone  defendant  was  to  become  liable,  it  w^as 
her  duty  to  do  so  within  a  reasonable  time,  and,  in  any  event, 
before  the  maker  of  the  note  became  insolvent  and  a  fugitive ;  that 
her  neglect  to  do  so,  and  the  damage  to  him  thereby,  has  released 
him  from  the  obligation  of  his  conditional  contract. 

The  position,  however,  of  a  guarantor  of  payment,  as  between 
him  and  the  maker  of  the  note,  is  that  of  a  surety.  It  is  a  com- 
mon-law contract,  and  not  a  contract  known  to  the  law-merchant. 
It  is  an  absolute  promise  to  pay  if  the  maker  does  not  pay,  and 
the  right  of  action  accrues  against  the  guarantor  at  the  moment 
the  maker  fails  to  pay.  The  guarantor  would  not  be  discharged 
by  any  neglect  or  even  refusal  on  the  part  of  the  holder  of  the 
note  to  prosecute  the  principal,  even  if  the  maker  was  solventi 
at  the  maturity  of  the  note,  and  subsecjuently  became  insolvent ; 
and  the  fact  that  no  notice  of  non-payment  was  given  the  guar- 
antor at  tlie  maturity  of  the  note,  or  at  any  time  before  bringing 
suit,  would  not  aff'ect  the  rights  of  the  holder  of  the  note  against 
the  guarantor.  The  guarantor's  remedy  was  to  have  paid  the 
note,  and  taken  it  up,  and  himself  proceeded  against  the  maker. 

A  guaranty  is  held  to  be  a  contract  by  w^hich  one  person  is 
bound  to  another  for  the  due  fulfillment  of  a  promise  or  engage- 
ment of  a  third  party.     2  Pars.  Cont.  3. 


102  GrARAXTV  AND   SURETYSHIP. 

The  contract  or  undertakiii.c:  of  a  surety  is  a  contract  by- 
one  person  to  be  answerable  for  tlic  payment  of  some  debt,  or 
the  perfomiance  of  some  act  or  (Uuy.  in  case  of  the  failure  of 
another  person  who  is  himself  ]M-imarily  responsible  for  the  pay- 
ment of  such  debt  or  the  performance  of  the  act  or  duty.  3  Add. 
Cont.  Sec.  iiii  ;  3  Kent,  Comm.  121  ;  JVright  v.  Simpsoti,  6  Ves. 

734- 

In  the  case  of  Pain  v.  Packard,  13  Johns.  174  (decided  m 
1816),  it  was  held  that  if  the  surety  call  upon  the  creditor  to  col- 
lect the  debt  of  the  principal,  and  he  disregard  that  request,  and 
thereby  the  surety  is  injured,  as  by  the  subsequent  insolvency  of 
the  principal,  the  surety  was  thereby  discharged.  A  directly  con- 
trary decision  was  given  by  Cliancellor  Kent,  upon  argument  and 
full  consideration,  the  following  year.  King  v.  Baldzvin,  2  Johns. 
Ch.  554.  Two  years  later  the  last  decision  was  reversed  by  the 
court  of  errors  by  castmg  vote  of  the  presiding  officer,  a  lay- 
man, and  against  the  opinion  of  tlie  majority  of  the  judges.  Ki'ig 
V.  Baldwin,  17  Johns.  384. 

In  the  case  of  Broz.'n  v.  Ciirtiss,  2  X.  Y.  226  (decided  in 
1849),  the  action  was  brought  against  the  guarantor  of  a  promis- 
sory note.  On  the  trial  it  was  admitted  that  there  had  been  no 
demand  of  the  maker,  ncjr  any  notice  of  non-payment,  and  the 
note  was  dated  Aj^-il  2,  1838,  and  payable  six  months  after  the 
date.  The  suit  was  brought  against  the  guarantor  in  September, 
1845.  The  defendant  offered  to  prove  that,  from  the  time  the 
note  fell  due  until  the  latter  part  of  1843,  the  maker  was  able  to 
pay  the  note;  that  he  then  failed,  and  was  insolvent  at  the  time 
of  the  commencement  of  the  suit,  and  still  remained  so.  This 
evidence  was  objected  to,  and  excluded,  and  verdict  directed  for 
])laintilT.     The  court  (at  p.  227)  says: 

"The  undertaking  of  the  defendant  was  not  conditional,  like  that  of 
an  indorser ;  nor  was  it  upon  any  condition  whatever.  It  was  an  absolute 
agreement  that  the  note  should  be  paid  by  the  maker  at  maturity.  When 
the  maker  failed  to  pay,  the  defendant's  contract  was  broken,  and  the 
plaintiff  had  a  complete  right  of  action  against  him.  It  was  no  part  of 
the  agreement  that  the  plaintiff  should  give  notice  of  the  non-payment,  nor 
thiL  he  should  sue  the  maker,  or  use  any  diligence  to  get  the  money  from 
him.  '^  ■"■■  *  Proof  that  wiicn  the  note  became  due,  and  for  several 
years  afterwards,  the  maker  was  abundantly  able  to  pay,  and  that  he  had 
since  become  insolvent,  would  be  no  answer  to  this  action.  The  defend- 
ant was  under  an  absolute  agreement  to  see  that  the  maker  paid  the  note 
at  maturitv.      --^     *     * 


ROBERTS   VS.    HAWKINS. 


103 


"If  the  defendant  wished  to  have  him  sued,  he  should  have  taken  up 
the  note,  and  brought  the  suit  himself.  The  plaintiff  was  under  no  obliga- 
tion to  institute  legal  proceedings." 

The  weight  of  authority,  both  in  this  country  and  in  England, 
sustains  tliis  doctrine,  and  we  think  with  much  good  reason.  Bel- 
lo-cvs  V.  LoTcU,  5  Pick.  310;  Davis  v.  Muggins,  3  X.  H.  231; 
Page  V.  Webster,  15  Ale.  249;  Dennis  v.  Rider,  2  McLean,  451. 

In  Train  v.  Jones,  1 1  Vt.  446,  it  is  said : 

"An  absohite  guaranty  that  the  debt  of  a  third  person  shaU 
be  paid,  or  that  he  shall  pay  it,  imposes  the  same  obligation  upon 
the  guarantor.  In  either  case,  it  is  an  absolute  guaranty  of  the 
sum  stipulated,  and  the  creditor  is  not  bound  to  use  diligence,  or 
to  give  reasonable  notice  of  non-payment."  Noyes  v.  Nichols, 
28  Vt.  174. 

In  Bhwm  V.  Warder,  13  Neb.  478  (14  N.  W.  Rep.  396), 
which  was  an  action  against  the  guarantors  of  payment  of  a  prom- 
issory note,  the  court  says : 

"This  is  an  absolute  contract,  for  a  lawful  consideration,  that 
the  money  expressed  in  the  note  shall  be  paid  at  maturity  thereof 
at  all  events,  and  depends  in  no  degree  upon  a  demand  of  pay- 
ment of  the  maker  of  the  note,  or  any  diligence  on  the  part  of  the 
holder." 

Alere  passiveness  on  the  part  of  the  holder  will  not  release 
the  guarantor,  even  if  the  maker  of  the  note  was  solvent  at  its 
maturity,  and  thereafter  became  insolvent.  Breed  v.  Hillhotise,  7 
Conn.  528;  Bank  v.  Hopson,  53  Conn.  454  (5  Atl.  Rep.  601); 
Foster  v.  ToUeson,  13  Rich.  Law,  33  ;  Machine  Co.  v.  Jones,  61  Mo. 
409 ;  Barker  v.  Scnddcr,  56  Id.  276 ;  Norton  v.  Eastman,  4  Greenl. 
521 ;  Brown  v.  Curtiss,  2  N.  Y.  225  ;  Allen  v.  Rightniere,  20  Johns. 
365;  Bank  v.  Sinclair,  60  N.  H.  100;  Gage  v.  Bank,  79  Ilk  62; 
Hungerford  v.  O'Brien,  37  Minn.  306  (34  N.  W.  Rep.  161). 

It  follows  that,  this  being  an  absolute  undertaking  on  the  part 
of  the  defendant  as  guarantor  to  pay  the  amount  of  this  note  at 
maturity  in  the  event  of  the  default  of  payment  by  the  principal, 
the  guarantor  could  not  demand  any  diligence  on  the  part  of  the 
holder  of  the  note  to  collect  the  same  from  the  principal.  It  was 
his  duty  to  perform  his  contract — that  is,  to  pay  the  note  upon 
default  of  the  principal ;  and  it  is  no  answer  for  him  to  say  that 
the  principal  was  solvent  at  the  maturity  of  the  note,  and  that  the 
same  could  then  have  been  collected  of  him  by  the  holder,  and  that 


104  GUARANTY  AN'I)   SURF.TVSIIIP, 

he  has  since  become  insolvent.  If  he  wished  to  protect  himself 
against  loss,  he  should  have  kept  his  engagement  with  the  holder 
of  the  note,  paid  it  upon  default  of  the  principal,  taken  up  the  note, 
and  himself  prosecuted  the  party  for  whose  faithful  performance 
of  the  contract  he  became  liable. 

The  court  properly  directed  the  verdict  for  the  ])laintiff  ;  and 
the  judgment  of  the  court  below  nuist  be  affirmed,  with  costs. 

The  other  Justices  concurred. 


S.Miiii  c'.v.  Moi.i.F.sox  (1896), 
i4<S  X.  \'.  241  ;  42  X.  E.  669. 

A])pcal  from  Su])reme  Court,  general  term.     First  deijartment. 

ll'illiaji!  C.  Bccchcr,  for  aDpellant. 
Jacob  P.  Miller,  for  respondent. 

O'Brikx,  J.  The  defendant  has  been  held  liable  as  surety 
upon  a  bond  given  to  secure  the  performance,  by  the  con- 
tractors, of  a  building  contract,  dated  Xovember  i,  1888,  in  which 
they  agreed  to  furnish,  cut.  set  and  clean  all  the  new  granite  w^ork 
for  the  enlargement  of  a  public  building  in  the  City  of  N^ew  York. 
The  plaintifif  agreed  to  pay  the  contractors  for  this  work  the  sum 
of  $30,000,  in  monthly  ixiyments  of  not  to  exceed  80%  of  "the 
estimated  value  of  the  work  iierformed  on  the  building,"  the  bal- 
ance, or  final  payment,  to  be  made  when  the  work  was  completed. 
The  work  was  to  be  done  according  to  drawings  and  specifications 
referred  to  in  the  contract,  and  the  payments  made  upon  the  cer- 
tificate of  the  plaintift's  superintendent.  The  rights  and  obliga- 
tions of  the  parties  are  specified  in  the  contract  with  minute  detail, 
and,  among  other  things,  it  was  stipulated  that,  in  case  the  con- 
tractors failed  to  ])erform,  the  ])laintiti'  might  take  possession  of 
the  work  and  com])lete  it  at  the  contractors'  expense.  It  is  con- 
ceded that  they  failed  to  perform  and  that  the  plaintiff  was  obliged 
to  complete  the  work  himself  at  an  expense  of  several  thousand 
dollars  more  than  the  contract  ]M-ice.  It  w^as  agreed  between  the 
plaintifif  and  the  contractors  that  the  latter  should  give  to  him  a 
bond  to  insure  the   faithful  Derformancc  of  the  contract,  and,  in 


SMITPI  \'S     MOLLESON.  105 

pur=;uance  of  this  agreement,  the  defendant,  in  behalf  of  the  con- 
t: actors,  executed,  under  seal,  and  dehvered,  the  instrument  upon 
which  tliis  action  v;as  brought.  It  bears  date  Dec.  27,  1888,  and 
was  executed  sul)sequent  to  the  contract,  and  one  of  the  condidons 
is  that  the  contractors  should  well  and  truly  perform  the  contract 
referred  to,  according  to  its  terms,  in  which  case  the  instrument 
should  be  void  and  of  no  effect,  but  that,  in  case  they  failed  to  so 
perform,  the  defendant  would  pay  to  the  plaintiff  his  damages  sus- 
tained bv  reason,  of  such  non-performance,  not  exceeding  a  sum 
named.  It  is  conceded  that  the  plaintiff  sustained  damages  by 
reason  of  the  failure  of  the  contractors  to  perform  their  contract, 
and  the  recovery  is  within  the  limits  of  the  bond.  The  defense  is 
that  the  bond  was  given  without  consideration,  and  that  the  defend- 
ant became  released  from  its  obligations  by  reason  of  changes  in 
and  departures  from  the  contract  guaranteed,  without  the  defend- 
ant's consent,  by  the  parties  thereto.  At  the  trial  a  verdict  was 
directed  for  the  plaintiff. 

The  plaintiff'  entered  into  the  contract  and  bound  himself, 
according  to  its  terms,  upon  the  faith  of  the  promise  of  the  con- 
tractors to  give  the  bond,  and  it  is  admitted  that  if  this  was  con- 
current with  the  execution  and  delivery  of  the  instrument,  it  would 
constitute  a  sufficient  consideration.  But,  since  the  bond  was  given 
afterwards,  and,  as  the  defendant  claims,  subsequent  to  the  time 
that  the  contractors  had  entered  upon  tlie  actual  performance  of 
the  contract,  it  is  insisted  that  it  required  some  new  consideration. 
If  it  be  true  that  the  evidence  in  the  case  would  warrant  a  finding 
by  the  jury  that  the  contractors  were  engaged  in  the  performance 
of  the  contract  when  the  liond  was  given,  it  would  also  be  true  that 
this  was  by  the  grace  and  pleasure  of  the  plaintiff,  and  not  by 
virtue  of  any  right  under  the  contract.  Their  right  to  insist  upon 
performance,  as  against  the  plaintiff',  and  to  receive  the  benefit  of 
the  contract,  was  not  perfected  until  the  bond  was  given.  What- 
ever the  contractors  may  have  assumed  to  do  before,  it  was  only 
upon  the  delivery  of  the  bond  that  the  contract  became  complete 
and  binding  upon  the  plaintiff',  and  hence  the  mutual  obligations 
imposed  upon  the  contractors  at  one  time,  and  upon  the  plaintiff 
at  another,  furnished  a  consideration  for  the  bond.  Bank  v.  Coit, 
104  N.  Y.  532,  II  N.  E.  54. 

The  other  defense  rests  mainly  upon  a  construction  of  the 
contract  which  the  defendant  claims  to  be  the  correct  one.  It 
should  be  observed  at  the  outset  that  the  contract  guaranteed  is, 


106  GUARANTY  AND  SURETYSHIP. 

by  reference,  made  a  part  of  the  bond,  and  therefore,  in  order  to 
determine  the  scope  of  the  defendant's  undertaking,  the  two  instru- 
ments must  be  read  together.  It  is  true,  as  the  learned  counsel  for 
the  defendant  contends,  that  the  liability  of  a  surety  is  strictissiini 
juris.  But  that  does  not  mean  that  a  different  rule  must  be  applied 
in  the  construction  of  contracts  of  suretyship  than  that  which  is  to 
be  applied  in  the  construction  of  contracts  in  general.  Like  all 
other  contracts,  the  undertaking  of  a  surety  must  be  construed 
fairly  and  reasonably,  and  according  to  the  intention  of  the  parties. 
If  the  surety  has  used  aml)iguous  language,  and  the  party  secured 
has  advanced  his-,  money  on  the  faith  of  the  interpretation  most 
favorable  to  his  rights,  that  will,  ordinarily,  prevail,  if  the  instru- 
ment is  open,  reasonably,  to  such  interpretation.  It  means  that  a 
surety  shall  not  be  held  beyond  the  precise  stipulations  of  his  con- 
tract. He  is  not  liable  on  any  implied  engagement,  where  a  party 
contracting  for  his  own  interest  might  be,  and  he  has  the  right  to 
insist  on  the  strict  performance  of  any  condition  for  which  he  has 
stipulated,  whethers  others  would  consider  it  material  or  not.  But 
where  the  question  is  a?  to  the  meaning  of  the  written  language 
in  which  he  has  contracted,  there  is  no  difference,  and  there  ought 
not  to  lie  any,  between  the  contract  of  a  surety  and  that  of  any 
other  party.  In  this  respect  they  are  ordinary  commercial  obliga- 
tions standing  uj)on  the  same  footing  as  other  contracts.  Gates  v. 
McKee,  13  N.  Y.  232;  Bennett  v.  Draper,  139  N.  Y.  266,  34  N.  E. 
79  T.  When  the  terms  of  the  contract  guaranteed  have  been 
changed,  or  the  contract,  as  finally  made,  is  not  the  one  upon  which 
the  surety  agreed  to  become  bound,  he  will  be  released.  Page  v. 
Krekey,  137  N.  Y.  307,  33  N.  E.  311.  But  in  this  case  there  is  no 
claim  that  the  terms  of  the  building  contract  to  which  the  defend- 
ant's bond  related,  have  in  any  respect  been  changed  by  the  par- 
ties to  it.  The  most  that  is  claimed  is  that,  in  its  performance,  the 
parties  have  so  far  departed  from  its  terms  as  to  change  the  de- 
fendant's condition,  to  her  prejudice,  and  to  deprive  her  of  rights 
and  benefits  under  the  contract,  which,  otherwise,  she  would  be 
entitled  to  by  subrogation.  Where  the  party  -secured  does  some 
act  v/hich  changes  the  position  of  the  surety  to  his  injury  or  preju- 
dice, the  latter  is  no  longer  bound.  Phelps  v.  Borland,  103  N.  Y. 
406,  9  N.  E.  307;  Bank  v.  Streetcr,  106  N.  Y.  186,  12  N.  E.  706; 
Lynch  v.  Reynolds,  16  Johns.  41  :  Brown  v.  IVillianis,  4  Wend. 
360;  Navigation  Co.  v.  Kolt,  6  C.  B.  (N.  S.)  550;  Calvert  v.  Dock 
Co.,  2  Keen  638;  Warrc  v.  Calvert,  7  Adol.  &  E.  143. 


SMITH  VS.   MOLLESON.  107 

The  learned  counsel  for  the  defendant  insists  upon  his  con- 
struction of  the  contract,  that  the  plaintiff  paid  or  advanced  to  the 
contractors  a  larger  portion  of  the  contract  price  than  he  was  re- 
quired to  by  the  contract,  and  that  it  was  paid  without  any  certifi- 
cate.  The  contention  rests  upon  the  defendant's  construction  of  the 
building  contract,  which,  in  substance,  is  tliat  the  provision  for 
"monthly  payments,  not  to  exceed  eighty  per  cent  of  the  estimated 
value  of  the  work  performed  on  the  building,"  required  the  estimate 
to  be  based  only  upon  the  work  when  actually  set  in  the  building, 
whereas  it  was  in  fact  based  upon  the  work  actually  done  under  or 
in  pursuance  of  the  contract,  whether  the  granite  was  actually  placed 
in  the  building  or  not.     This  is  the  alleged  departure  from  the 
terms  of  the  contract,  which  constitutes  the  principal  ground  of 
the  defense.     Before  the  conclusion  of  the  learned  counsel  for  the 
defendant  can  be  adopted,  we  nnist  assent  to  the  premise  from  which 
it  is  sought  to  be  deduced,  and  that  requires  us  to  ascertain  and 
determine  the  true  meaning  and  intention  of  the  clause  of  the  con- 
tract above  quoted.     It  must  be  given  a  fair  and  reasonable  con- 
struction, and  the  general  situation  will  throw  some  light  upon  the 
meaning  of  the  written  words.    It  appears  that  the  granite  required 
was  to  be  quarried  in  Nova  Scotia,  transported  from  the  quarry  to 
a  place  in  Connecticut,  where  it  was  to  be  dressed,  and  then  trans- 
ported to  New  York,  and  set  in  the  building.     The  work  involved 
in  the  preparation  and  carriage  of  the  material  was  by  far  the  most 
expensive  part  of  the  contract,  and  it  appears  that  the  contractors 
had  no  means  to  m.eet  this  outlay,  except  the  monthly  payments, 
so  that  if  they  could  realize  nothing  until  the  stone  was  placed  in 
the  building,  they  would  be  practically  unable  to  perform  the  con- 
tract at  all.      This  would  be  an  unreasonable   construction,  and 
would,  if  acted  upon,  operate  so  oppressively  as  to  place  the  con- 
tractors at  the  mercy  of  the  owner,  a  view  that  is  always  to  be 
avoided  when  possible.     Russell  v.  Allerton,   io8  N.  Y.  292,  15 
N.  E.  391.    It  would  deprive  them  of  all  right  to  monthly  payments 
except  when  and  to  the  extent  the  granite  had  actually  been  placed 
in  the  walls,  however  large  tlieir  outlay  for  procuring  and  pre- 
paring the  material  may  have  been  during  the  month.    The  parties 
had  the  right  to  give  to  the  expression  "work  performed  on  the 
building"  a  broader  meaning,  which  could  very  properly  include 
the  value  of  any  work  done  or  materials  procured  under  the  con- 
tract toward  its  erection,  although  the  granite  procured  and  pre- 
pared had  not  yet  been  placed.     Since  no  payments  were  made  in 


108  GUARANTY  Axn  si'ri:tvsii  I  P. 

excess  of  80%  of  the  value  of  the  work  performed  in  setting  the 
stone,  and  in  procuring  and  prejxiring  ihcni,  and  as  all  the  material 
so  procured  vauI  prepared  actually  went  into  the  huilding,  no  ad- 
vances were  made  by  the  plaintiff  to  the  contractors  beyond  the 
fair  requirements  of  the  contract.  It  is  said  that  it  cannot  be  sup- 
posed that  the  plaintiff  contracted  to  ])ay  any  part  of  the  contract 
price  for  material  at  the  quarry,  and  at  the  i)lace  where  it  was  to 
be  prepared,  or  for  the  work  performed  in  prej^aring  the  same  for 
use,  before  it  could  be  known  that  it  would  ever  actually  reach  the 
building.  But  since  the  monthly  payments  were  stipulated  for  the 
purpose  of  enabling  tiie  contractors  to  prosecute  the  work,  and  as 
the  operation  of  placing  the  granite  in  place  v.hen  prepared  was 
the  least  i)art  of  it,  we  do  not  think  that  this  view  w^ould  be  un- 
reasonable or  improbable.  It  gave  to  the  plaintiff  reasonable 
assurance  and  protection  against  loss,  and  at  the  same  time  enabled 
the  contractors  to  prosecute  the  work,  \\1iile  the  plaintiff"  is 
described  in  the  contract  as  owner,  lie  in  fact  had  no  interest  what- 
ever in  the  building,  but  was  the  general  and  immediate  con- 
tractor from  the  city  for  the  erection  ■>£  the  whole  building,  and 
the  defendant's  principles  were  his  sub-contractors  for  a  ])articular 
and  s])ecific  part  of  the  work,  namely,  the  granite  work.  The 
plaintiff'  was  not  entitled  to  his  contract  price  from  the  city  until 
the  building  was  com])leted,  though  the  of^cers  representing  it  had 
discretion  to  make  advances.  Moreover,  by  a  clause  in  the  con- 
tract, the  plaintiff,  in  case  the  subcontractors  abandoned  the  work 
or  failed  to  perform,  could  terminate  the  contract  and  go  on  with 
the  work  himself,  and  in  thai  event  tlie  material  in  jjrocess  of 
preparation  should  belong  \o  him  for  llu'  ]uirpose  of  completing 
the  work,  whether  such  material  was  at  tlie  building,  at  the  quarry, 
or  at  some  other  place.  So  that  the  plaintiff",  in  stipulating  for 
monthly  payments,  estimated  upon  the  work  actually  performed, 
whether  in  the  building  or  not,  assumed  nothing  more  than  the 
ordinary  and  usual  risks  incident  to  all  contracts  of  that  character. 
We  do  not  think,  therefore,  that  the  meaning  of  the  contract  should 
be  made  to  depend  upon  the  use  of  the  words,  "on  the  building," 
when  w-e  can  see,  from  the  situation  of  the  parties,  the  nature  of 
the  work  and  other  provisions  of  the  instrument,  that  the  intention 
was  to  make  the  advances  as  the  work  j)rogressed.  To  give  to  it 
the  other  construction  would,  in  practice,  disable  the  contractors  at 
the  very  outset  from  jjerformance,  and  impose  upon  the  defendant 
a  liability,  inevitable  from  the  beginning,  and  possibly  in  a  much 


S-MITII   VS.    MOLLESON.  109 

larger  amount  than  has  followed  the  construction  adopted  by  the 
parties  themselves. 

The  objection  that  the  payments  were  made  without  the  cer- 
tificate may  be  answered  in  the  same  way.     The  owner  could  dis- 
pense v.'ith  it  if  he  so  elected,  under  the  terms  of  the  contract,  if 
not  upon  general  principles,  and  since  the  payments  made  without 
it  were  not  greater  in  amount  than,  upon  the  true  construction  of 
the  contract,  they  sliould  h.ave  been  if  it  had  been  exacted,  the  omis- 
sion of  the  owner  to  insist  upon  it  did  not  prejudice  the  surety. 
We  are  not  dealing,  now,  with  any  actual  change  in  the  terms  of 
the  contract,  but  with  acts  or  omissions  of  the  plaintiff  in  the  pei- 
formance.  whicli,  in  order  to  operate  to  release  the  surety,  must  be 
of  such  a  character  that  it  can  be  said  that  her  position  was  changed 
to  her  prejudice.     It  should  also  be  observed  that  there  is  a  clause 
in  the  contract  the  material  part  of  which  reads  as  follows  :  "Should 
the  owner,  at  any  time  during  the  progress  of  said  work,  request 
any  alterations,  deviations,  additions  :jr  omissions  from  the  said 
contract,  he  shall  be  at  liberty  to  do  so,  and  the  same  shall  in  no 
wav  affect  or  make  void  the  contract."    The  defendant,  having,  by 
reference,  in  eft'ect  made  the  contract  a  part  of  the  bond,  must  be 
deemed  to  have  assented  to  this  provision,  and  to  any  changes  or 
deviations  in  performance  from  the  building  contract  made  under 
it.       She   has,   in   eft'ect,  guaranteed  the   perfomiance  of  a  written 
contract  between  other  parties,  which,  by  its  terms,  permitted  the 
parties  to  change  it  or  deviate  from  it.     While  it  is  not  important 
to  consider  the  real  scope  of  this  clause,  since  w^e  prefer  to  dispose 
of  the  questions  in  the  case  upon  the  ground  that  there  was  no 
material  departure  from  the  contract,  when  properly  construed,  it 
should  be  noted  that  she  consented  m  advance  to  changes  of  some 
character  which  are  permitted  by  the  contract  in  language  quite 
broad  and  comprehensive.     It  would  not  l)e  difficult  to  show  that 
the  plaintiff  might,  under  this  provision  at  least,  dispense  with  the 
formalitv  of  a  certificate  when  called  upon  by  the  contractors,  from 
time  to  time,  for  some  portion  of  the  contract  price,  without  dis- 
charging the  surety,  even  though  it  v/as  more  important  to  the 
defendant's  interest  and  protection  than  it  appears  to  be.     It  is 
manifest  that  the  provision  vvas  intended  for  the  benefit  of  the 
owner  alone,  and  he  could  waive  it  without  affecting  the  defend- 
ant's liability. 

The  contractors  having  failed  to  complete  the  work,  the  plain- 
tiff gave  the  notice  required  by  the  contract  in  order  to  terminate 


110  GUARANTY  AND  SURKTYSHIP. 

It.  The  contract  provitlcs  when  and  upon  what  contingencies  the 
plaintiff  could  terminate,  and  the  manner  (jf  proceeding  for  that 
purpose.  The  hnal  act  which  was  to  ]'iu  an  end  to  the  contract 
was  taking  possession  of  the  premises  by  the  plainlif'f.  The  notice 
may  have  been  a  necessary  step  or  formality  in  that  direction,  but, 
of  itself,  it  did  not  operate  to  bring  the  contract  to  an  end.  It  was 
clearly  within  the  power  of  the  plaintiff  to  recall  it,  after  given,  if 
not  upon  general  principles,  then  under  the  permission  contained 
in  the  contract.  It  appears  that  he  was  induced,  subsequently,  to 
.allow  the  contractors  to  go  on,  and  they  again  attempted  to  com- 
plete the  work,  and  again  failed.  It  is  said  that  the  loss  which  the 
plaintiff  sustained,  and  for  which  the  recovery  w^as  had,  occurred 
under  this  permission,  and  the  defendant's  counsel  treats  this  last 
effort  at  performance  as  a  new  contract  in  regard  to  which  the 
surety  was  not  bound.  It  was  manifestly  nothing  more  than  a 
mere  waiver  or  recall  of  the  notice  for  the  termination  of  the  con- 
tract, and  the  work  was  performed  auvl  payment  made,  not  upon 
a  new  contract,  but  upon  the  old  one,  up  to  the  time  that  the  final 
notice  was  given,  when  the  plaintiff  was  obliged  to  take  possession 
of  the  work.  The  case  was  very  fully  considered  in  the  court  be- 
low, and,  as  we  have  sufficiently  indicated  the  ground  of  our  con- 
currence in  the  decision  upon  pouits  that  are  controlling,  it  is 
lumecessary  to  notice  other  and  minor  questions  in  the  case.  The 
judgment  should  therefore  be  affirmed,  with  costs.     All  concur. 

Judgment  aifunied. 


Ballard  vs.  Burton   (1892). 
64  Vt.  387;  16  L.  \i.  A.  664,  24  Atl.  769. 

I'^xceptions  by  defendant  to  rulings  of  the  iM-anklin  County 
•Court  made  during  the  trial  of  an  action  brought  to  enforce  the 
.alleged  liability  of  defendant  for  the  amount  of  a  certificate  of 
deposit  wdiich  he  had  indorsed.- which  resulted  in  a  judgment  in 
favor  of  i^laintiff.     Judgment  reversed. 


BALLARD  VS.   BURTON.  Ill 

The  certificate  of  deposit  which  constituted  the  foundation  for 
the  cause  of  action  was  as  follows : 

"No.  3483. 
First  National  Bank  of  St.  Albans,  St.  Alea.ns,  Vt.,  Jan.  14,  1884. 
I   hereby  certify  that  Joseph  Ballard  has  this  day   deposited  in   this 
bank  nine  hundred  sixty-two  dollars,  payable  to  the  order  of  himself  on 
return  of  this  certificate  properly  indorsed,  with  interest  at  4  per  cent  per 
annum. 

(Signed)  A.   Sowles." 

and  on  the  back  thereof^ 

E.  A.  SowLES,  A.  SowLES,  O.  A.  Burton,  Surety. 

Messrs.  Farriiigton  &  Post,  and  irHson  &  Hall,  for  defendant. 
H.  C.  Adams  and  Ballard  &  Biirlcton,  for  plaintiff. 
Start,  J.,  delivered  the  opinion  of  the  court : 

The  defendant's  motion  for  a  verdict  was  properly  overruled. 
It  appears  from  testimony,  not  controverted,  that  the  defendant  was 
a  stockholder  and  a  director  of  the  First  National  Bank  of  St. 
Albans.  The  plaintiff  and  his  sister  had  money  deposited  there, 
evidenced  by  certificates  of  deposit.  There  was  a  run  on  the  bank, 
and  the  plaintiff"  presented  these  certificates,  and  demanded  the 
money  evidenced  by  them.  There  was  a  sufficient  amount  of  monev 
at  hand  to  pay  the  sums  demanded ;  but  the  officers  of  the  bank 
desired  to  retain  it,  and  asked  the  plaintiff  to  leave  it.  Thereupon 
he  told  them  he  would  accept  of  a  new  certificate  signed  by  the 
defendant :  otherwise  he  wanted  the  money.  They  gave  him  such 
a  certificate,  and  he  surrendered  up  to  the  bank  the  old  certificates. 
The  plaintiff'  subsequently  paid  his  sister  the  amount  of  her  certifi- 
cate, which  was  included  in  the  new  certificate.  The  cashier  of 
the  bank  understood  the  plaintiff'  was  tO'  forbear  for  a  reasonable 
time  the  exercise  of  his  right  to  draw^  his  money,  and  the  plaintiff' 
did  forbear  until  the  bank  closed  its  doors,  and  its  funds  went  into 
the  hands  of  a  receiver.  At  this  time  the  bank  was  insolvent.  The 
evidence  fails  to  show  that  a  definite  period  of  forbearance  was 
agreed  upon,  but  no  question  is  made  but  that  the  plaintiff'  did 
forbear  for  a  reasonable  tiine.  The  uncontroverted  evidence 
clearly  entitled  the  plaintiff  to  a  holding  by  the  court  that  there 
was  a  sufficient  consideration  for  the  defendant's  promise.  The 
request  by  the  officers  of  the  bank  that  the  plaintiff"  leave  the 
money,  his  reply,  the  giving  of  a  new  certificate,  the  surrender  of 


Ill*  ilL'ARAN'l^'    AND   Sriv'iyiVSIIIP. 

the  i>l(l  oni's,  and  tlie  forbearance  of  the  plaintiff  achiiit  of  l)nt  one 
interpretation.  The  plaintiff,  in  consideration  of  a  new  certificate 
sig;ned  hy  the  defendant,  surrendered  the  old  certificates,  and 
agreed  to  and  did  forbear  the  exercise  of  a  legal  right  to  then  draw 
his  own  and  his  sister's  money.  In  view  of  the  uncontroverted 
facts  and  circumstances  in  the  case,  any  other  construction  of  the 
contract  would  be  meaningless.  It  is  a  rule,  in  construing  con- 
tracts, that  thev  are  to  Ite  so  understood  as  to  have  a  legal  and 
actual  operation  ;  and  a  construction  which  would  be  senseless,  in 
view  of  the  circumstances  of  the  case,  or  wholly  inaj)plicable,  should 
never  be  adopted.  Story,  Cont.  §  640;  Atzvood  v.  Cobb,  16  Pick. 
227;  26  Am.  Dec.  657;  Eraiis  v.  Sanders,  8  Port.  (Ala.)  497.  33 
Am.  Dec.  297. 

Words  are  not  to  be  construed  in  a  frivolous  or  ineffectual 
sense,  when  a  contrar}-  exposition  can  be  given  them.  They  should 
have  a  Reasonable  constructi.'n.  according  to  the  intent  of  the 
parties.  Chitty.  Cont.  79.  In  Gunnison  v.  Bancroft.  11  \'t.  490, 
it  is  held  that  language  used  l)y  one  party  to  a  contract  is  to  receive 
such  a  construction  as  he  at  the  time  supposed  the.  other  party 
woulfl  give  to  it,  or  such  a  construction  as  the  other  party  was 
fairly  justified  in  giving  to  it.  In  Jndcvine  v.  Goodrich.  35  Yt. 
19,  where  one.  in  reply  to  the  request  of  another  for  a  license  to 
do  something  in  resi)ect  to  the  former's  property,  did  not  intend 
to  accede  to  the  recpiest,  but  purposely  used  language  susceptible 
of  a  double  interpretation  in  this  respect,  with  the  intention  that 
the  other  ])arl\-  should  (leri\e  llie  impression  that  he  did  accede 
to  the  request,  and  the  other  did  derive  such  impression  and  relied 
on  it,  it  was  held  that  he  was  l;)ound  to  the  same  extent  as  if  he 
had,  in  express  words,  granted  the  license.  When  the  plaintiff 
said  to  the  officers  of  the  bank,  in  rei)ly  to  their  re()uests  that  he 
leave  the  money,  that  he  would  accej)!  a  new  certificate  signed  by 
the  defendant,  otherwise  he  wanted  his  money,  they  had  the  right 
to  understand  him  as  of^"ering  to  leave  the  money  for  a  reasonable 
time  if  such  a  certificate  were  furnished.  They  accepted  of  his 
olTer,  furnished  the  certificate,  he  accepted  of  it,  and  forbore  for  a 
reasonable  time  the  exercise  of  his  right  to  draw  the  money.  All 
parties  seemed  to  have  understood  thai  such  was  his  undertaking, 
and  what  was  said  and  done  admits  of  no  c^her  inter])retati()n,  and 
such  will  lie  deemed  to  have  been  the  contract. 

It  is  insisted  that  the  defendant's  promise  was  without  con- 
sideration, because  no  time  of  forbearance  was  agreed  upon.     A 


];ali.akd  vs.  burton.  113 

promise  to  forbear  and  give  further  time  for  the  payment  of  a 
debt,  although  no  certain  or  definite  time  be  named,  if  followed  by 
an  actual  forbearance  for  a  reasonable  time,  is  a  valid  and  sufficient 
consideration  for  a  promise  to  pay  the  debt  by  a  person  other  than 
the  debtor.  King  v.  Upton,  4  Me.  387,  16  Am.  Dec.  266;  Elton  v. 
Johnson,  16  Conn.  253;  Hoive  v.  Taggart,  133  Mass.  284;  Prouty 
V.  Wilson,  123  Mass.  297;  Robinson  v.  Gould,  11  Cush.  55;  Moore 
V.  McKenney,  83  Me.  80.  In  Howe  v.  Taggart,  supra.  Field,  J., 
in  delivering-  the  opinion  of  the  court,  says  :  "It  seems  to  have  been 
assumed  in  this  commonwealth  that  an  agreement  to  forbear  bring- 
ing suit  for  a  debt  due,  even  although  for  an  indefinite  time,  and 
even  although  it  cannot  be  construed  to  be  an  agreement  for  per- 
petual forbearance,  if  followed  by  actual  forbearance  for  a  reason- 
able time,  is  a  good  consideration  for  a  promise."  In  Moore  v. 
McKenney,  supra,  decided  by  the  Supreme  Court  of  Maine  in 
1890,  the  'defendant  wrote  his  name  upon  the  back  of  the  note 
declared  upon,  intending  thereby  to  guarantee  its  payment.  He 
did  this  in  consideration  of  the  plaintifif's  promise  to  forbear  and 
give  further  time  for  the  payment  of  the  note ;  no  time  of  for- 
bearance was  agreed  upon,  and  it  was  held  that  the  court  properly 
ordered  a  verdict  for  the  plaintiff.  Walton,  J.,  in  delivering  the 
opinion  of  the  court,  says:  "If  the  promise  is  in  general  t'.'rms.  no 
particular  time  being  named,  the  law  implies  that  the  forbearance 
shall  be  for  a  reasonable  time.  Such  is  the  legal  construction  of 
such  a  promise.  The  debtor,  therefore,  by  such  promise,  does 
obtain  a  right,  not  only  to  some  delay,  but  to  a  reasonable  delay ; 
such  as,  under  all  the  circumstances,  he  is  reasonably  entitled  to." 
In  King  v.  Upton,  supra,  the  promise  counted  on  was  to  pay  the 
debt  of  another,  in  consideration  that  the  creditor  would  "forbear 
and  give  further  time  for  the  payment  of  the  debt,"  naming  no 
time.  The  plaintiff  averred  that  he  did  thereupon  forbear,  and 
the  consideration  was  held  sufficient.  In  Calkins  v.  Chandler,  36 
Mich.  320,  24  Am.  Rep.  593,  it  is  held  that  an  agreement  to  pay 
the  debt  of  another  in  consideration  that  the  creditor  would  forbear- 
and  give  further  time  for  payment  is  founded  upon  a  good  con- 
sideration, although  no  definite  time  of  forbearance  is  named.  In 
Hakes  V.  Hotchkiss,  23  Vt.  235,  it  is  said:  "If  no  agreement  be 
made  as  to  the  length  of  time  during  which  the  promisee  will  for- 
bear, the  law  will  presume  that  he  undertakes  to  forbear  for  a 
reasonable  time,  and  this  is  sufficiently  certain,  and  is  a  good  con- 
sideration." Parsons  in  his  work  on  Contracts  (vol.  i,  p.  442 ).> 
9 


114  GUARANTY   AND  SURETYSHIP. 

says:  "X'or  need  the  agreement  to  delay  he  for  a  time  certain,  for  it 
may  he  for  a  reasonahle  time  only,  and  yet  he  sufficient  considera- 
tion for  a  promise." 

The  Revised  Statutes  of  the  United  States  (sec.  5242,  relating 
to  l)anks)  provide,  among  other  things,  that  all  payments  of 
money  made  after  the  commission  of  an  act  of  insolvency,  or  in 
contemplation  thereof,  with  a  view  to  prevent  tlie  application  of  its 
assets  in  the  manner  provided  in  that  chapter,  (i  wiih  a  view  to 
the  preference  of  one  creditor  to  another,  except;  in  payment  of  its 
circulating-  notes,  shall  he  utterly  null  and  void,  it  is  insisted  hy 
the  defendant  that  a  payment  by  the  bank  at  the  time  the  plaintiff 
called  for  his  money  would  have  been  void  under  this  provision 
of  the  statute ;  that  the  plaintiff  lost  nothing  by  his  agreement 
and  forbearance :  and  that  neither  the  bank  nor  the  defendant 
were  benefitted  thereliy.  Xotwithstancling  this  statute  and  the 
insolvency  of  the  bank,  the  plaintiff'  waived  a  legal  right  in  con- 
sideration of  the  defendant's  promise.  Before  he  agreed  to  for- 
bear, the  certificates  were  not  subject  to  any  defense,  and  he  could 
have  negotiated  them,  and  they  would  have  been  payable  on  pre- 
sentation at  the  bank.  By  surrendering  them,  and  taking  a  new 
certificate  impaired  by  this  agreement  to  forbear,  he  made  his 
claim  subject  to  a  defense  that  would  be  likely  to  aff'ect  its  nego- 
tiability and  value.  Had  the  plaintiff  drawn  his  money,  it  is  not 
certain  that  the  receiver  would  have  called  for  it,  or  that  he  would 
have  recovered  it  by  an  action.  A  determination  of  the  receiver's 
right  to  the  money  might  necessitate  a  trial  of  doubtful  issues  of 
law  and  fact.  The  plaintiff'  had  a  right  to  draw,  and  to  try  and 
hold  the  money.  He  waived  this  right  in  consideration  of  the 
defendant's  ])n)niise.  ikit  for  th.is  promise  he  would  have  drawn 
Ins  money  January  14,  1884.  The  receiver  was  not  appointed 
until  some  three  months  thereafter,  during  which  time  no  one 
could  have  rightfully  called  on  him  for  the  money ;  and  during 
this  time,  at  least,  he  waived  his  right  to  have  and  enjoy  his 
money.  He  may,  or  may  not,  have  been  damaged  by  waiving  these 
rights.  He  waived  them  in  consideration  of  the  defendant's  prom- 
ise, and  that  is  sufficient. 

Consideration  does  not  necessarily  depend  upon  whether  the 
thing  promised  results  in  a  benefit  to  the  promisee,  or  a  detriment 
to  the  promisor.  It  is  enough  that  something  is  promised,  or  the 
exercise  of  a  present  right  is  forborne.  In  Anson,  on  Contracts. 
p.  62,  it  is  said :  "Courts  will  not  inquire  whether  the  thing  which 


EALLARI)  VS     BURTON.  115 

forms  the  consideration  does,  in  fact,  benefit  the  promisee  or  u 
third  party  or  is  of  any  benefit  to  any  one.  It  is  enough  that  some- 
thing is  promised,  done,  forborne,  or  sulfered  by  the  party  to  whom 
the  promise  is  made,  as  a  consideration  for  the  promise  made  tq 
him."  The  law  wiU  not  enter  into  an  inquiry  as  to  the  adequacy 
of  the  consideration  for  a  promise,  but  will  leave  the  parties  to  be 
the  sole  judges  of  the  benefits  to  be  derived  therefrom,  unless  the 
inadequacy  of  the  consideration  is  so  gross  as  of  itself  to  prove 
fraud  or  imposition.  Judy  v.  Louderman,  48  Ohio  St.  562.  In 
general  a  waiver  of  any  legal  right,  at  the  request  of  another 
party,  is  a  sufficient  consideration  for  a  promise,  i  Parsons,  Cont., 
p.  444.  Any  damage  or  suspension  or  forbearance  of  a  right  will 
be  sufficient  to  sustain  a  promise.  2  Kent,  Com.  12th  ed.,  p.  465. 
In  Burr  v.  Wilcox,  13  Allen,  273,  Wells,  J.,  in  defining  "consid- 
erations," says:  "Any  act  done  at  the  defendant's  request,  and  for 
his  convenience,  or  to  the  inconvenience  of  the  plaintiff,  would  be 
sufficient."  The  exchequer  chamber,  in  1875,  defined  "considera- 
tion" as  follows :  "A  valuable  consideration  in  the  sense  of  the 
law,  may  consist  either  in  some  right,  interest,  profit  or  benefit 
accruing  to  the  one  party,  or  some  forbearance,  detriment,  loss,  or 
responsibility  given,  suffered,  or  undertaken  by  the  other."  Any 
act  done  by  the  promisee  at  the  request  of  the  promisor,  however 
trifling  the  loss  to  himself  or  the  benefit  to  the  promisor,  is  a  suffi- 
cient consideration  for  a  promise  made  without  fraud,  and  with 
full  knowledge  of  all  the  circumstances.  Doyle  v.  Dixon,  97  Mass. 
213,  93  Am.  Dec.  80.  Pollock,  in  his  work  on  Contracts,  p.  166, 
says :  "Consideration  means,  not  so  much  that  one  party  is  profit- 
ing, as  that  the  other  abandons  some  legal  right  in  the  present." 
Iri  Boyd  v.  Frieze,  5  Gray  554,  Shaw,  Ch.  J.,  says :  "An  agree- 
ment, therefore,  to  forego  one's  legal  right,  or  forbear  collecting 
a  debt,  or  enforcing  any  other  beneficial  right,  is  a  good  consid- 
eration for  an  express  promise  made  upon  it.  Such  agreement 
may  be  expressed  or  implied  by  law." 

There  was  evidence  tending  to  show  that  the  defendant  was 
a  maker  of  the  certificate,  and,  if  such  maker,  his  undertaking  was 
to  pay  the  plaintiff  the  amount  called  for  by  the  certificate  when  it, 
properly  indorsed,  should  be  returned  to  the  bank.  The  bank 
having  been  closed,  and  a  receiver  appointed,  a  return  of  the  cer- 
tificate, properly  indorsed,  to  the  receiver,  was  all  that  was  re- 
quired. No  other  demand  or  notice  was  necessary  before  bringing 
suit.     There  were  no  officers  of  the  bank  to  whom  the  certificate 


116  GUARANTY   AND   SITRKTV.SIIIP. 

could  he  returned.  The  funds  of  the  hank  were  in  the  hands  of 
the  receiver,  and,  for  the  purpose  of  returning  the  certificate  as 
therein  provided,  the  receiver  was  the  l>ank.  Tlie  plaintitif  was 
allowed  to  testify  that  he  would  nut  have  left  his  money  in  the 
hank  if  he  had  not  understood  that  the  defendant  was  ohligated 
to  pay  it.  The  plaintiff  was  allowed  to  testify,  without  ohjection, 
that  he  went  to  the  hank  for  the  purpose  of  drawing  his  money; 
and  there  was  no  error  in  allnwing  iiini  to  state  that  he  would 
ha\e  done  what  he  i:)roi)osed  to  do,  hut  for  the  defendant's  promise. 
The  defendant  requested  tlie  court  to  instruct  the  jury  "that  if 
Alhert  Sowles  and  Edward  S.  Sowles  signed  the  certificate  as  in- 
dorsers.  with  the  right  of  demand  and  notice,  then,  under  the 
testimon}-.  the  defendant  is  not  liable.  We  think  from  the  testi- 
mony, that,  if  Alhert  and  Iviward  A.  Sowles  were  indorsers,  then 
the  defendant  was  an  indorser ;  hut  the  necessitv  for  such  instruc- 
tion was  obviated  by  the  instruction  that,  if  the  jury  found  that  the 
defendant  was  an  indorser,  then  the  plaintiff  could  not  recover, 
and  it  was  not  error  to  decline  to  give  the  instruction  requested. 
W'hatever  may  have  been  the  relation  of  the  signers  of  the  certi- 
ficate to  each  other,  they  were  for  the  purpose  of  determining  their 
liability  to  the  plaintiff,  either  makers  or  indorsers  of  the  certificate. 
The  evidence  showing  the  understanding  between  the  signers  of 
the  certificate  as  to  their  respective  liability  to  the  plaintiff',  and 
as  between  each  other,  was  not  withdrawn  from  the  consideration 
of  the  jury,  and  it  was  for  them  to  say,  from  all  the  evidence, 
whether  tlie  undertaking  of  the  defendant  was  that  of  a  maker 
or  that  of  an  indorser.  The  court  told  the  jury  that,  if  nothing 
was  said  to  the  i:)laintiff  to  explain  to  him  that  their  obligation  on 
the  certificate  was  that  of  indorsers,  and  not  makers,  he  had 
the  right  to  unflerstand  that  ihey  were  makers  and  absolutely  liable 
upon  it.  Jt  is  insisted  by  counsel  for  the  defendant  that  the  afifix- 
ing  of  the  word  "surety"  to  the  defendant's  name  was  notice  to  the 
plaintiff  that  the  defendant  intended  to  limit  and  restrict  his  liabil- 
itv,  and  tliat  tliis  fact  should  (wercome  the  i)resunii)tion  of  law  laid 
down  by  the  court.  The  word  "surety."  affixed  to  the  defendant's 
name,  only  indicated  to  the  plaintiff'  the  fact  that  the  defendant 
was  surety  for  the  bank,  and  this  was  already  known  to  liim.  He 
knew  that  the  bank  had  the  money ;  that  the  defendants  E.  A. 
Sowles  and  A.  Sowles  did  not  have  it;  and  that,  in  fact,  they  were 
sureties  for  the  bank :  but  this  fact  did  not  change  the  under- 
taking of  the  defendant  from  that  of  a  maker  to  that  of  an  in- 


BALLARD    VS.    BURTON.  117 

dorser  entitled  to  demand  and  notice.  A  surety  is  an  original 
maker,  and  becomes  primarily  and  absolutely  liable,  as  much  so 
as  the  principal,  to  any  person  lawfully  holding  the  paper.  Bank 
of  Newbury  v.  Richards,  35  Vt.  284.  The  defendant  was  liable, 
prima  facie,  as  a  maker  of  the  certificate.  National  Bank  of 
BeUocCs  Falls  v.  Dorset  Marble  Co.,  61  Vt.  106,  2  L.  R.  A.  428; 
Strong  V.  Rikers,  16  Vt.  554.  But  this  presumption  was  suscep- 
tible of  being  controlled  by  evidence  of  the  real  obligation  in- 
tended to  be  assumed  by  the  defendant,  and  known  to  the  plaintiff. 
The  court  made  a  proper  application  of  this  rule  in  admitting  evi- 
dence as  to  what  transpired  before  and  at  the  time  of  the  execution 
of  the  certificate  of  deposit,  as  aft'ecting  the  liability  of  the  defend- 
ant, and  told  the  jury  that,  if  they  found  that  the  defendant  was 
an  indorser,  then  the  plaintiff  could  not  recover.  To  justify  the 
verdict  returned  by  the  jury,  they  must  have  found  that  the  defend- 
ant's undertaking  was  that  of  a  maker  of  the  certificate.  The  court 
told  the  jur}'  that,  if  the  defendant  put  his  name  upon  the  certi- 
ficate for  the  purpose  of  stopping  a  run  on  the  bank  and  tiding  it 
over  its  then  exigency,  this  would  be  a  sufficient  consideration.  If 
this  was  not  the  true  test  of  consideration,  the  defendant  has  no 
reason  to  complain.  It  was  not  necessary  that  he  receive  a  con- 
sideration. As  the  evidence  stood,  the  question  as  to  whether  he 
received  a  consideration  was  an  immaterial  issue,  and  the  defend- 
ant was  not  prejudiced  by  the  court's  submitting  such  issue  to  the 
jury.  It  appeared  from  the  undisputed  facts  that  his  principal 
received  a  sufficient  consideration  to  support  his  promise.  This 
was  all  that  was  required.  Moore  v.  McKenncy,  King  v.  Upton 
and  Hozi'c  v.  Taggart,  supra.  The  court  might  have  properly 
held  that  a  sufficient  consideration  was  established  by  the  uncon- 
tradicted facts,  and  withheld  this  question  from,  the  consideration 
of  the  jury.  The  plaintiff  concedes  that  there  was  error  in  the 
pro  forma  ruling  of  the  court  upon  the  question  of  interest,  and 
offers  to  remit  the  excess  of  interest  included  in  the  judgment 
rendered  in  the  county  court. 

Judgment  reversed. 

Judgment  for  the  plaintiff  to  recover  $962,  with  interest  to 
be  computed  at  the  rate  of  4  per  cent  per  annum  from  the  date  of 
the  certificate  to  the  date  of  the  writ,  and  6  per  cent  thereafter, 
and  his  costs  in  the  count}-  court,  less  the  dividends  paid  on  the 
certificate  bv  the  receiver,  and  the  defendant's  costs  in  this  court. 


118  GUARANTY  AND   SURKTYSHIP. 

Taft,  J.  On  the  14th  of  January,  1884.  ilie  hank  was  hope- 
lessly insolvent  and  the  plaintitit  had  no  right  to  withdraw  his 
money.  I,  therefore,  while  not  dissenting,  doubt  on  the  subject 
of  consideration. 


D.wrs  Skwixg  Maciitne  Compaxy  z's.  RiniARns  ct.  al.  (1885). 
1  13  [\  S.  524;  L.  Kd'n  Book  29,  480. 

In  error  to  the  Supreme  Court  of  the  District  of  Columbia. 

Mr.  James  G.  Payne,  for  jilaintilt  in  error. 

-Mr.  //'.  A.  Cook  and  Mr.  C.  C.  Cole,  for  defendants  in  error. 

Gray,  J.  This  was  an  action,  l^rought  in  the  Supreme  Court 
of  the  District  of  Columbia,  upon  a  guaranty  of  the  performance 
by  one  John  W.  Poler  of  a  contract  under  seal,  dated  December 
17,  1872,  between  him  and  the  plaintiff  corporation,  by  which  it 
was  agreed  that  all  sales  of  sewing  machines  which  the  corporation 
should  make  to  him  should  be  upon  certain  terms  and  conditions^ 
the  principal  of  which  were  that  Poler  should  use  all  rea.sonable 
efforts  to  introduce,  supply  and  sell  the  machines  of  the  corpora- 
tion, at  not  less  than  its  regular  retail  prices,  throughout  the  Dis- 
trict of  Columbia  and  the  Counties  of  Prince  George  and  Mont- 
gomery, in  the  State  of  Maryland,  and  should  pay  all  indebtedness 
by  account,  note,  indorsement  or  otherwise,  which  should  arise 
from  him  to  the  corporation  imder  the  contract,  and  should  not 
engage  in  the  sale  of  sewing  machines  of  any  other  manufacture ; 
and  that  the  corporation,  during  the  continuance  of  the  agency, 
should  sell  its  machines  to  him  at  a  certain  discount,  and  receive 
payment  therefor  in  a  certain  manner ;  and  that  either  j^arty  might 
terminate  the  agency  at  pleasure. 

The  guaranty  was  upon  the  same  paper  with  the  above  con- 
tract, and  was  as  follo^vs : 

"For  value  received,  we  hereby  guarantee  to  the  Davis  Sewing  Ma- 
chine Company,  of  Watertown,  New  York,  the  full  performance  of  the 
foregoing  contract  on  the  part  of  John  W.  Poler,  and  the  payment  by 
said  John  W.  Poler  of  all  indebtedness,  by  account,  note,  indorsement  of 
notes  (including  renewals  and  extensions)  or  otherwise,  to  the  said  Davis 


DAVIS    SEWING    MACHINE    CO.    VS.    RICHARDS.  119 

Sewing    Machine    Company,    for    property    sold    to    said   John    W.    Poler, 
under  this  contract,  to  the  amount  of  Three  Thousand   ($3,000)    Dollars. 
"Dated   Washington,  D.   C,  this  17th  day  of  December,   1S72. 

"A.     ROTHWELL. 

"A.    C.    Richards." 

Under  the  guaranty  were  these  words :  "I  consider  the  above 
sureties  entirely  responsible.  Washington,  Dec.  19.  1872.  J.  T. 
Stevens." 

At  the  trial  the  above  papers,  signed  by  the  parties,  were  given 
in  evidence  by  the  plaintiff,  and  there  v;as  proof  of  the  following 
facts:  On  December  17,  1872,  at  Washington,  the  contract  was 
executed  by  Poler,  and  the  guaranty  was  signed  by  the  defendants, 
and  the  contract  and  guaranty,  after  being  so  signed,  were  deliv- 
ered by  the  defendants  to  Poler,  and  by  Poler  to  Stevens,  the 
plaintiff's  attorney,  and  by  Stevens  afterwards  forwarded,  with 
his  recommendation  of  tlie  sureties,  to  the  plaintiff"  at  W^atertown 
in  the  State  of  New  York,  and  the  contract  there  executed  by  the 
plaintiff.  The  plaintiff  afterwards  delivered  goods  to  Poler  under 
the  contract,  and  he  did  not  pay  for  them.  The  defendants  had 
no  notice  of  the  plaintiff's  execution  of  the  contract,  or  acceptance 
of  the  guaranty,  and  no  notice  or  knowledge  that  the  plaintiff  had 
furnished  any  goods  to  Poler  under  the  contract  or  upon  the  faith 
of  the  guaranty,  until  January,  1875,  when  payment  therefor  was 
demanded  bv  the  plaintiff'  of  the  defendants  and  refused.  At  the 
time  of  the  signing  of  the  guaranty,  the  plaintiff  had  furnished  no 
goods  to  Poler,  and  the  negotiations  then  pending  between  the 
plaintiff  and  Poler  related  to  prospective  transactions  between 
them. 

The  court  instructed  the  jury  as  follows:  "It  appearing,  at 
the  time  the  defendants  signed  the  gtiaranty  on  the  back  of  the 
contract  between  plaintiff'  and  Poler,  the  plaintiff  had  not  executed 
the  contract  or  assented  thereto,  and  that  the  contract  and  guar- 
anty related  to  prospective  dealings  between  the  plaintiff  and  Poler, 
and  that  subsequently  to  the  signing  thereof  by  the  defendants  the 
attorney  for  the  plaintiffs  approved  the  responsibility  of  the  guar- 
antors and  sent  the  contract  to  Watertown,  New  York,  to  the 
plaintiff",  which  subsequently  signed  it,  and  no  notice  having  been 
given  by  the  plaintiff"  to  the  defendants  of  the  acceptance  of  such 
contract  and  guaranty,,  and  that  it  intended  to  furnish  goods  there- 
on and  hold  the  defendants  responsible,  the  plaintiff  cannot  recover, 
and  the  jury  should  find  for  the  defendants." 


12(>  OUARANTV   AN'D   .SL'RKTYSHI  P. 

A  verdict  was  returned  for  the  defendants,  and  jutlgnient  ren- 
dered thereon,  which  on  exceptions  by  the  plaintitY  was  affirmed 
at  the  (leneral  Terni.  and  the  plaintifif  sued  out  this  writ  oi  error, 
penchnj;-  whicli  one  of  the  defendants  died  and  liis  executor  was 
summoned  in. 

The  decision  of  this  case  depends  upon  the  apphcation  of  the 
rules  of  law  stated  in  the  opinion  in  the  recent  case  of  Dazis  v. 
Wells,  104  U.  S.  159,  in  which  the  earher  decisions  of  this  court 
upon  the  subject  are  reviewed. 

Those  rules  may  be  summed  uj)  is  follows:  A  contract  of 
guaranty,  like  every  other  contract,  can  only  be  made  by  the 
nuitual  assent  of  the  parties.  If  the  .guaranty  is  si^^^ned  by  the 
guarantor  at  the  request  of  the  other  party,  or  if  the  latter's  agree- 
men  to  accept  is  contemporaneous  with  the  guaranty,  or  if  the 
receipt  from  him  of  a  valuable  consideration,  however  small,  is 
acknowledged  in  the  guaranty,  llie  mutual  assent  is  ])roved,  and 
the  delivery  of  the  guaranty  to  him  or  for  his  use  completes  the 
contract.  But  if  the  guaranty  is  signed  by  the  guarantor  with- 
out any  previous  request  of  the  other  party,  and  in  his  al)sence, 
for  no  consideration  moving  between  them  except  future  advances 
to  l)e  made  to  the  ])rincipal  debtor,  the  guaranty  is  in  legal  efifect 
an  offer  or  proposal  on  the  part  of  the  guarantor,  needing  an 
accejitance  by  the  other  party  to  complete  the  contract. 

The  case  at  bar  belongs  to  the  latter  class.  There  is  no  evi- 
dence of  any  request  from  the  plaintiff  corporation  to  the  guaran- 
tors or  of  anv  consideration  moving  from  it  and  received  or  ac- 
knowledged by  them  at  the  time  of  their  signing  the  guaranty. 
The  general  words  at  the  beginning  of  a  guaranty,  "value  re- 
ceived," without  stating  from  whom,  arc  quite  as  consistent  with 
a  consideration  received  by  the  guarantor  from  the  principal  debtor 
only.  The  certificate  of  the  sufficiency  of  the  guarantors,  written 
by  the  plaintiff's  attorney  under  the  guaranty,  bears  date  two  days 
later  than  the  guaranty  itself.  The  plaintiff's  original  contract 
with  the  principal  debtor  was  not  executed  by  the  plaintiff  until 
after  that.  The  guarantors  had  no  notice  that  their  sufficiency 
had  been  approved,  or  that  their  guaranty  had  been  accepted,  or 
even  that  the  original  contract  had  been  executed  or  assented  to 
by  the  ]jlaintiff,  until  long  afterward,  when  i)ayment  was  de- 
manded of  them  for  goods  supplied  by  the  plaintiff  to  the  princii)al 
debtor. 

Judgment  affirmed. 


gano  vs.  farmers  bank.  121 

-Gang  vs.  Farmers'  Baxk  of  Kkxtuckv  at  Georgetowx  (1898) 
103  Ky.  508;  45  S.  W.  519. 

Appeal  from  Circuit  Court,  Scott  county. 

J  as.  7.  Kelly  and  Geo.  E.  Prcrcitt,  for  appellant. 
Owens  &  Fiiinell,  for  appellee. 

Hazelric.g,  J.  The  appellant,  Gano,  and  nine  others  executed 
a  writing-  to  the  end  that  one  P.  T.  Pullen  might  obtain  the  sum  of 
$io.coo  with  which  to  run  a  milling  business  in  Georgetown,  Ken- 
tucky. The  appellee  bank,  on  the  strength  of  this  writing,  fur- 
nished $5,000,  which  was  used  to  pay  off  a  debt  then  owing  the 
bank  by  Pullen,  and  also  $5,000  which  was  used  in  the  business. 
After  a  time,  Pullen  being  insolvent,  the  bank  called  on  the  obligors 
in  the  writing  for  a  discharge  of  their  undertaking.  All  seemed 
to  have  paid  their  respective  shares  demanded  by  the  writing,  ex- 
cept the  appellant,  who  tendered  certain  issues  of  law  and  fact  in 
defense  of  the  action  which  followed  liis  refusal  to  pay  his  share. 
The  writing  which  forms  the  basis  of  action  is  as  follows : 

"P.  T.  Pullen,  of  Georgetown,  Kentucky,  contemplating  the  leasing 
of  the  Thompson  mills,  and  carrying  on  the  milling  business,  and  being  in 
need  of  capital  with  which  to  buy  stock  and  run  the  same  as  it  should  be 
run  successfully :  Now,  in  order  to  aid  him,  we,  W.  E.  Pullen,  George 
Carley,  George  V.  Payne,  T.  T.  Hedger,  J.  M.  Penn,  James  W.  Craig, 
Buford  Hall,  Daniel  Gano,  S.  ?>.  Triplett,  and  Warren  C.  Graves,  whose 
names  are  hereto  signed,  agree  to  become  his  surety  to  an  amount  not 
exceeding  ten  thousand  dollars  in  the  aggregate.  After  this  instrument 
of  writing  had  been  signed  by  all  of  us  (ten  in  numlier),  it  may  be  used  by 
the  said  P.  T.  Pullen  in  the  nature  of  a  collateral  for  a  sum  or  sums  not 
exceeding  ten  thousand  dollars  in  the  aggregate,  and  we,  the  said  signers, 
shall  be  bound  jointly  and  severally  as  sureties  upon  any  note  or  notes  not 
exceeding  in  the  aggregate  said  sum  to  which  said  Pullen  shall  sign  his 
name  and  deposit  this  as  collateral.  In  case  the  money  is  borrowed  of  more 
than  one  party,  the  lenders  can  agree  upon  who  shall  hold  this  writing  for 
the  benefit  of  ali.  Said  Pullen  agrees  to  mortgage  all  property  he  now  has 
to  us  in  order  to  secure  us  by  virtue  of  obligations  assumed  in  this  instru- 
ment, and  renew  said  mortgage  from  time  to  time  when  required,  upon 
any  and  all  property  he  may  have.  This  instrument  of  writing  to  con- 
tinue in  force  for  three  years  from  the  first  day  of  July,  1891,  and  no 
longer,  and  if  at  any  time  any  one  or  more  of  the  signers  hereto  should 
die  or  become  insolvent,  said  Pullen  is  to  either  pay  ofif  his  or  their  por- 
tion of  the  money  that  may  be  borrowed,  or  furnish  other  good  and 
:  solvent   surety  or   sureties   in   his   or  their   stead.      Said   Pullen   agrees   to 


122  GUARANTY   AND   Sl'RKTYSIIip. 

keep  all  grain  and  Hour  he  may  have  on  hand  insured  in  some  good  in- 
surance company  for  the  benefit  of  the  signers  hereto,  and  his  books  are 
at  all  times  to  be  open  to  the  inspection  of  any  one  or  all  of  the  said  sign- 
ers, either  in  person  or  by  an  expert  of  their  selection.  Given  under  our 
hands  this  15th  day  of  July,  1891. 

(Signed)  George  V.   Payne," 

And  others  named  in  the  vi'riting. 

The  paper,  as  we  have  already  indicated,  was  taken  by  PuUen 
to  tlie  appellee,  to  whom  Pullen  was  then  indebted  in  the  sum  of 
$5,000,  evidenced  by  Pullen's  note  with  his  brother  as  surety.  A 
new  note  was  then  executed  to  the  bank  for  $5,000,  and  this  note 
was  then  discounted  by  the  bank,  and  the  proceeds  taken  to  pay 
off  this  pre-existing  debt.  It  is  therefore  insisted  for  the  appel- 
lant that  the  principle  ainiounccd  in  Russell  v.  Ballard,  16  B.  Mon. 
205,  is  applicable  here  and,  when  applied,  the  surety  stands  dis- 
charged. It  was  there  said:  "If  a  note  be  purchased  by  a  party, 
with  notice  that  one  of  the  obligors  is  surety  merely,  and  that  the 
sale  and  purchase  will  defeat  the  purpose  for  which  it  was  exe- 
cuted by  him,  or  will  violate  any  understanding  or  agreement 
between  him  and  his  principal,  then  the  purchaser  will  be  affected 
by  such  notice,  and  cannot  hold  the  sttrcty  lialjle  on  the  note  to 
compel  hiiu  to  pay  it."  Here  the  bank  had  notice  that  Gano  was 
surety  merely  on  the  writing  taken  as  collateral  Ijy  the  bank  to 
secure  the  new  note,  and  it  had  notice  that  the  sale  and  purchase 
of  this  new  note  and  application  of  its  proceeds  to  pay  off  the 
old  debt  wcjuld  defeat  the  sole  purpose  for  which  the  writing  was 
executed  by  the  surety,  namely,  "to  raise  the  sum  of  ten  thousand 
dollars,  buy  stock  and  rtin  the  same."  This  wotild  seem  stifficient 
to  bring  the  case  within  the  principle  announced  in  the  cited  case, 
for  it  is  manifest  that,  if  one-half  the  capital  needed  to  carry  on 
the  milling  business  and  "run  the  same  successfully"  was  to  be 
taken  to  pay  off  an  old  debt,  the  business  must  suffer,  and  likely 
not  be  run  successfully.  But  this  is  not  all.  The  bank  had  notice 
that  the  sureties  looked  to  the  property  which  this  money — all  of 
it — would  buy  as  an  indemnity  by  way  of  mortgage ;  and  b}-  what- 
ever amount  the  actual  cash  furnished  Pullen  for  his  business  was 
lessened,  by  that  amount  the  value  of  their  indemnity  would  be 
lessened.  This  is  also  in  line  with  the  general  doctrine  so  often 
announced  by  the  textwriter  and  by  this  court  for  the  protection 
of  sureties.  W'c  might  assume  without  proof — but  the  evidence 
is  conclusive  un  the  point — that  appellant  would  not  have  entered 


GANO  VS.    FARMERS  BANK.  123 

into  this  contract  had  it  been  disclosed  to  him  that  this  "letter  of 
credit",  as  the  writing  may  be  termed,  was  to  be  used  to  pay  off 
the  large  debt  due  the  bank,  and  therefore  it  was  incumbent  on 
the  bank  to  disclose  to  the  surety  all  the  facts  material  to  the  risk 
before  it  could  divert  the  fund  intended  to  be  raised  by  the  col- 
lateral to  purposes  of  its  own.  The  rule  is  thus  stated  by  Mr. 
Story  in  his  Equity  Jurisprudence:  "The  contract  of  suretyship 
imports  entire  good  faith  and  confidence  between  the  parties  in 
regard  to  the  whole  transaction.  Any  concealment  of  material 
facts,  or  any  expressed  or  implied  misrepresentation  of  facts,  or 
any  undue  advantage  taken  of  a  surety  by  his  creditor,  either  by 
surprise  or  by  withholding  proper  information,  will  undoubtedly 
permit  sufficient  grounds  to  invalidate  the  contract."  Section  324. 
And  further:  "Thus  if  a  party  taking  a  guaranty  from  a  surety 
conceals  from  him  facts  which  increase  his  risk,  and  suffers  him 
to  enter  into  the  contract  under  false  impressions  as  to  the  real 
state  of  facts,  such  concealment  will  amount  to  a  fraud,  because 
the  party  is  bound  to  make  the  disclosure,  and  the  omission  to 
make  it  under  such  circumstances  is  equivalent  to  an  affirmation 
that  the  facts  do  not  exist."  Sections  214,  215.  See  Com.  v. 
Berry,  95  Ky.  443,  26  S.  W.  7,  and  cases  cited.  Other  obligors, 
who  lived  in  or  about  Georgetown,  the  scene  of  this  transaction, 
seem  either  to  have  had  knowledge  of  these  material  facts  at  the 
time,  or  obtained  it  shortly  afterwards,  and,  having  that  knowledge, 
still  paid  off  their  shares ;  but  the  appellant  was  an  old  man,  some 
85  years  of  age,  living  quite  a  distance  from  the  town,  and  visiting 
there  only  a  few  times  within  a  year.  There  is  no  doubt  of  his 
entire  ignorance  of  the  material  facts  indicated.  He  was  not  even 
apprised  of  the  fact  that  the  writing  had  been  used  by  Pullen  with 
the  bank  or  anyone  else,  and  money  obtained  thereby.  It  seems 
to  be  clear  that  he  was  entitled  to  this  notice.  He  had  merely 
offered  his  name  with  that  of  others  as  surety  to  whomsoever 
might  accept  the  offer  and  loan  of  money.  He  was  therefore 
entitled  to  notice  of  acceptance.  In  Steaduian  v.  Guthrie,  4  Mete. 
(Ky.)  148.  it  was  held  that:  "When  the  offer  is  to  guaranty  a 
debt  for  which  another  is  primarily  liable  in  consideration  of  some 
act  to  be  performed  by  the  creditor,  mere  performance  of  the  act 
is  not  sufficient  to  fix  the  liability  of  the  guarantor ;  but  the  credi- 
tor must  notify  the  guarantor  of  his  acceptance  of  the  offer  or  of 
his  intention  to  act  upon  if."  That  the  guarantor  might,  by  inquiry 
from  the  person  in  whose  favor  the  guaranty  was   given,  have 


llI4  GUARANTY  AND  SURETYSHIP. 

Icaniod  what  had  i)asse(l  between  the  s^iiarantees  and  himself,  does 
not  (Uspense  with  notice.  A  person  tints  proposin^ij  to  become 
surety  for  anotlier  is  not  bound  to  inc|uire  as  t(j  the  acceptance  of 
his  jjroposal.  The  creditor  who  intends  to  hold  him  responsible 
for  the  debt  of  another  must  show  reasonable  notice  of  such  inten- 
tion. See,  also,  Kinchcloc  v.  HoIdics,  7  B.  Mon.  5  ;  Lozvc  v.  Beck- 
li'itli.  14  B.  Mon.  189;  Thompson  v.  Glover.  78  Ky.  195.  It  is 
true  in  this  case  that  the  record  does  not  show  that  the  bank's  old 
del)t  on  Pullen  was  in  dauijer  of  being  lost.  It  was  secured  by  the 
brother  of  the  debtor,  who  was  solvent,  althou,q-h  his  property  was 
in  the  main  covered  by  mortgages,  and  he  was  already  indebted 
to  the  l)ank  in  a  considerable  sum.  Still  it  may  be  said  he 
was  soh'ent.  We  think  this,  however,  makes  no  difference.  It 
nmy  show  more  conclusively — what  is  already  apparent  enough — 
that  there  was  no  actual  fraud  intende^l  by  the  bank,  or  any  of  its 
officers,  in  the  transaction ;  but  this  does  not  change  the  legal 
status  of  the  jiarties  on  the  ])oint  involved.  It  further  appears  that 
the  brother  of  the  princii)al  debtor,  who  v.as  surety  on  an  old  debt, 
had  a  mortgage  on  certain  stf)ck  and  propert}'  belonging  to  the 
debtor  to  indemnify  him  in  his  suretyship ;  and  this  was  released, 
and  a  mortgage  taken  in  favor  of  the  obligors  in  the  writing  in 
question.  But  it  further  appears  that  the  value  of  this  property 
was  (|uite  insignificant,  and  that  appellant  had  no  knowledge  even 
tlial  this  had  been  done.  The  writing,  the  contents  of  which  the 
l)ank  had  notice  of,  because  they  acce])tod  and  acted  on  it,  entitled 
the  obligors  to  have  a  mortgage  on  all  the  property  the  debtor  had 
or  might  acquire ;  and  we  do  not  see  that,  because  one  was  in  fact 
■executed  of  which  no  notice  whatever  was  given  to  the  appellant, 
this  can  take  the  place  of  the  notice  to  which  we  have  said  appel- 
lant was  entitled  when  his  oflfer  was  accepted  and  acted  on  by 
the  bank.  Actual  notice  is  what  the  law  rec|uires,  and  notice  or 
knowledge  of  this  new  mortgage  might  have  been  sufficient,  but 
this  the  appellant  did  not  have.  We  think  the  plaintiff's  petition 
should  have  been  dismissed,  and  the  judgment  is  reversed  for  pro- 
ceedings consistent  with  this  opinion. 


GIBBS  VS.    BLANCIIARD.  125- 

GlBBS  ET  AL.  Z'S.   BlANCHARD   (  [867). 

15  Mich.  292. 

The  facts  and  the  exceptions  to  the  ruHngs  and  the  charge  of 
the  court  are  stated  in  the  opinion. 

M.  J.  Smiley,  for  plaintiff  in  error. 
H.  F.  Scz'ci-ciis,  for  defendant  in  error. 

Christinacy,  J.  The  main  question  in  this  case  is  whether 
the  promise  of  Gihbs  (one  of  the  defendants  below)  comes  within 
the  second  clause  of  the  second  section  of  our  statute  of  frauds, 
as  a  "special  promise  to  answer  for  the  debt,  default,  or  misdoings" 
of  Daily,  the  other  defendant. 

The  declaration  contains  a  special  count  upon  the  contract, 
and  the  common  counts  for  goods  sold  and  delivered.  The  special 
count  sets  forth  that,  "in  consideration  that  said  plaintiff  agreed 
to  sell  to  the  said  Daily  a  certain  horse  which  the  plaintiff'  then  and 
there  had,  of  the  value  of  sixty  dollars,  undertook  and  promised  the 
said  plaintiff  to  make,  sign  and  deliver  their  promissory  note  to 
said  plaintiff  or  bearer,  in  the  sum  of  sixty  dollars,  for  the  pur- 
chase price  of  said  horse,  which  said  promissory  note  was  to  be 
payable  thereafter,  in  six  months  from  date."  It  further  alleges 
that  the  plaintiff,  relying  upon  said  promise  of  said  defendants, 
and  in  consideration  thereof,  did  sell  and  deliver  the  horse  to  said 
John  Daily,  for  the  price  of  sixty  dollars.  The  breach  alleges  the 
failure  and  refusal  to  make  and  deliver  the  note,  as  well  as  the 
refusal  to  pay  the  money. 

It  was  clear,  from  the  evidence,  that  the  horse  was  bought  for 
the  benefit  of,  and  delivered  to  Daily,  and  that  the  plaintiff  would 
not  have  sold  the  horse  on  the  credit  of  Daily  alone.  But  upon 
the  question,  whether  Daily  and  Gibbs  were  to  give  a  joint  note, 
or  whether  the  latter  was  only  to  indorse  the  note  of  the  former,, 
or  to  become  his  guarantor,  the  evidence  was  conflicting. 

There  was  evidence  from  which  the  jury  might  have  found  a 
joint  promise,  or,  in  other  words,  a  promise  by  both  to  execute  and 
deliver  to  the  plaintiff  a  joint  note  for  the  price ;  and  from  the  cir- 
cumstances and  subsequent  acts  of  the  parties,  the  jury  might  have 
been  authorized  to  find  that  the  note  was  to  be  made  payable  in  six 


1"26  GUARAXTV  AND   SL'KKTVSH  1 1'. 

months,  though  they  might  also  have  found  that  no  particular 
time  was  mentioned  or  expressly  agreed  upon  for  which  the  note 
was  to  run. 

The  evidence  tending  to  show  that  the  promise  was  joint,  or 
that  a  joint  note  was  to  he  given,  was  substantially  this:  Gibbs 
and  Daily  called  upon  the  plaintiff  together,  and  Gibbs  asked 
plaintiff'  if  he  wanted  to  sell  his  mare.  Plaintiff"  said  he  did.  Gibbs 
intjuired  the  price,  and  being  told  sixty  dollars,  wanted  to  know  if 
plaintiff'  would  take  Daily's  note  if  he,  Gibbs,  would  sign  it  and  see 
it  paid ;  to  this  plaintiff  assented.  The  mare  r.ot  Ix-ing  present, 
and  Gibbs,  being  anxious  to  get  home,  said  Daily  might  go  with 
plaintiff  and  see  the  mare,  and  if  the  mare  suited  him  he  might 
fetch  her  back  with  him  and  draw  up  a  note  and  Daily  might  sign 
it.  and  the  first  time  he,  Gibbs,  went  to  town  he  would  sign  it. 
The  mare  was  delivered  to  Daily,  who  signed  a  note  for  it  at  six 
nu)nths,  which  was  afterwards  endorsed  by  Gibbs  on  Sunday. 
This  note  was  produced  on  the  trial  and  tendered  back  to  defend- 
ants. 

The  court  charged  the  jury  that  "if  it  was  the  understanding 
of  the  parties  that  Daily  was  the  purchaser,  and  that  he  should 
give  his  note  to  the  plaintiff  for  the  price,  and  that  Gibbs  should 
so  sign  as  only  to  be  liable  as  indorser,  the  plaintiff  must  fail.  If 
however,  the  understanding  of  the  parties  was,  at  the  time,  that 
Gibbs  and  Daily  were  the  buyers  of  the  mare,  and  that  both  were 
to  be  liable  as  ])urchasers  for  the  purchase  price,  and.  accordingly, 
should  become  joint  makers  of  a  promissory  note  for  its  payment, 
though  Daily  was  less  relied  u])()n  l)y  ihe  plaintiff  than  Gibbs,  and 
though,  in  point  of  fact,  it  was  understood  that  the  mare,  when 
bought,  should  belong  to  Daily,  the  plaintiff  is  entitled  to  recover. 
That  the  principle  in  this  class  of  cases  is,  that  if  the  agreement 
be  such  that  two  persons,  in  tlie  purchase  of  goods,  do  at  the  same 
time  become  co-debtors  to  the  seller  for  the  price,  then  both  are 
purchasers,  and  the  case  is  not  within  the  statute  of  frauds,  and  no 
memorandum  in  writing  is  necessary.  But  if  it  be  such  that  one, 
at  the  time,  becomes  debtor  to  the  seller,  and  the  other  security 
only  for  the  debt,  it  is  within  the  statute  of  frauds,  and  the  under- 
taking of  the  security  is  void  unless  a  nieniorandum  of  it  in  writing 
is  made." 

Though  the  f|uestion  is  one  requiring  some  accuracy  of  dis- 
crimination, I  have  come  to  the  conclusion,  after  a  careful  exam- 
ination of  the  authorities,  that  the  charge  of  the  court  was  not  only 


GIBBS  VS.   BLANCHARD.  127 

correct,  but  that  it  expresses  the  true  rule  of  law  applicable  to  the 
question  with  remarkable  clearness. 

No  question  can  arise  as  to  the  sufficiency  of  the  consideration 
for  the  undertaking  of  Gibbs,  whether  original  or  collateral,  with- 
in or  without  the  statute.  Without  his  promise,  the  plaintiff  would 
not  have  parted  with  his  property.  The  consideration,  therefore, 
is  equally  as  good  in  law  as  a  sale  of  the  horse  to  him  alone  would 
have  been  for  his  sole  promise  to  pay  the  price. 

The  plain  ordinary  meaning  of  the  language  used  in  this 
clause  of  the  statute  would  seem  sufficiently  to  indicate  that  the 
class  of  special  promises  required  to  be  in  writing  includes  only 
such  as  are  secondary  or  collateral  to,  or  in  aid  of  the  undertaking 
or  liability  of  some  other  party  whose  obligation,  as  between  the 
promisor  and  promisee,  is  original  or  primary.  If  there  be  no 
such  original  or  primary  undertaking  or  liability  of  another  party, 
there  is  nothing  to  which  the  promise  in  question  can  be  secondary 
or  collateral,  and  tne  promise  is,  therefore,  original  in  its  nature, 
and  not  within  the  statute.  In  other  words,  the  statute  applies 
only  to  promises  which  are  in  the  nature  of  guaranties  for  some 
original  or  primary  obligations  to  be  performed  by  another.  This 
has  been  settled  by  a  remarkably  uniform  course  of  decision  since 
the  passage  of  the  statute  (29  Car.  II.,  ch.  3,  Sec.  4),  which  does 
not  essentially  differ  from  our  own  and  tliose  of  most  of  the  states 
of  the  Union.  So  numerous  and  so  uniform  have  been  the  deci- 
sions upon  this  point,  that  it  \vould  savor  of  affectation  to  cite 
them.  They  will  be  found  cited  ni  most  of  the  elementary  treatises : 
See  Browne  on  Stat.  Frauds,  ch.  10  ;  Chitty  on  Cont.,  p.  442,  et  seq. ; 
2  Pars,  on  Cont.,  4th  ed.,  301.  And  though  the  terms  original  ana 
collateral  have  iieen  criticised,  yet  when  used,  the  one  to  mark 
the  obligation  of  the  principal  debtor,  the  other  that  of  the  person 
who  undertakes  to  answer  for  sucli  debt,  they  are  strictly  correct, 
and  give  the  true  view  of  this  clause  of  the  statute :  Mallory  v. 
GiUctt,  2T  N.  Y.  412,  414:  Flrowne  on  Stat.  Frauds,  ch.  10,  Sec. 
T92. 

'  As  a  result  of  this  principle,  that  one  must  be  held  originally 
or  primarily,  and  the  other  only  collaterally,  or  in  default  of  the 
former  it  follows  that  the  statute  only  applies  to  such  promises 
made  in  behalf  or  for  the  benefit  of  another,  as  would,  if  valid, 
create  a  distinct  and  several  liability  of  the  party  thus  promising, 
and  not  a  joint  liability  with  the  party  in  whose  behalf  it  is  made. 
For  if  one  be  bound  in  the  first  instance  and  at  all  events,  and  the 


128  GUARANTY   AND   SUKKTYSHIP. 

Other  only  contingently,  or  on  default  of  the  first,  the  liability 
could  not  be  joint.  i)n  the  other  hand,  if  the  promise  or  the  obli- 
gation of  the  two  be  joint,  as  between  tb.eni,  (in  the-  one  side  and 
the  ijroniisee  on  tJK'  other,  then  neither  is  collateral  to  the  other, 
and  such  Joint  ])roniise  i^  original  as  to  both.  Hence  it  has  been 
held  in  h^ngland  that  an  agreement^ to  convert  a  separate  into  a 
joint  debt  is  not  within  the  staUUe  ;  the  effect  being  to  create  a  new 
debt,  in  consideration  of  the  fornier  benig  extinguished:  Ex  parte 
I. ant,-,  I    De  (iex.  300;  Ih'owne  on  Stat,  of  Frauds,  193. 

Where  the  questicMi  arises  (as  it  lias  in  almost  all  the  cases) 
as  one  of  the  several  liability  of  the  party  promising  in  behalf  of 
another  (as  for  the  price  of  goods  sold  to  an  ither),  the  true  rule 
undoubtedlv  is,  that  if  the  latter  (to  wlioni  tlie  goods  are  sold) 
be  liable  at  all,  then  the  promise  of  the  former  is  collateral,  and 
must  be  in  writing ;  because,  from  the  very  nature  of  such  a  case, 
the  party  to  \\liom  die  goods  are  sold,  and  in  whose  behalf  the 
promise  is  made,  is  the  i:)rincipal  debtor,  and  1)ecause  it  would  be 
manifestly  unreasonable  to  hold  that  both  were  in  such  cases 
severally  liable  as  principals,  as  upon  several  original  undertakings 
at  the  same  moment.  See  Hctticld  et  ciL  v.  Dene,  3  Dutcher,  440; 
Dixon  V.  Fracce,  1  K.  D.  Smith,  32.  tXnd  this  rule  ai)])lies  ecjually 
when  the  ])romise  is  made  in  reference  to  a  ])rc-existing  liability  of 
anoth.er,  if  the  plaintilT  in  accepting  the  promise  does  not  rt^lease  the 
l)rinci]);d.  In  reference  to  all  such  cases  tlie  authorities  may  be  said 
to  ])e  entire)}-  unifonn.  But  the  rule  thus  estal)lished  as  to  cases 
where  the  (|uestion  is  one  of  the  screra!  liabilifv  of  tlie  part\-  making 
the  s])ecial  promise,  can,  I  think,  have  no  application  to  the  question 
of  a  joint  liabilitv  upon  a  joint  promise  of  the  two.  The  onlv  intima- 
tion to  the  contr.arx'  whicli  I  ha\'e  seen  is  to  be  found  in  a  dictum  of 
judge  Catron  in  Matthc:cs  v.  Milloii,  4  Ycrg.  576,  a  case  in  which 
no  such  question  was  involved,  there  being  no  evidence  tending  to 
show  a  joint  promise.  To  sa\-  that  when  the  ])arty  originally  owing 
the  debt,  or  for  whom  goods  are  purchased  and  to  whom  they  are 
delivered,  is  liable  at  all.  no  other  jx'rson  can  1h'  lield  severally 
hable  unless  the  ])romise  be  in  writing,  is  merely  saying  that  such 
])romise  is  collateral,  and,  therefore,  within  the  statute.  But  to 
say  that  they  cannot  both  become  jointl\-  lialile  upon  their  joint 
promise,  not  in  writing,  to  p.i\-  such  debt  or  the  ])rice  of  such 
goods,  if  till'  part\-  originally  owing  tlu-  debt  or  receiving  the 
goods  be  at  all  liable,  is  but  anoth.er  form  of  declaring  that  it  is 
not  competent  for  both  to  become  original  promisors,  as  between 


GIBBS  VS.    BLANCIIARD.  129 

them  and  the  promisee,  unless  both  are  under  an  equal  obligation, 
as  betzcceii  themselves,  for  the  ultimate  payment  of  the  debt.  Such 
a  proposition,  it  seems  to  me,  can  not  be  maintained  either  upon 
principle  or  authority.  Such  an  objection  to  a  joint  promise  seems 
rather  to  have  reference  to  some  supposed  defect  of  consideration 
(a  question  entirely  distinct  from  the  statute)  than  to  the  promise. 
And,  if  the  party  promising  jointly  with  another  to  whom  goods 
are  furnished,  can  not  be  bound  jointly  with  the  latter,  because, 
as  between  the  two  promisors,  he,  not  having  received  the  goods, 
is  under  no  obligation  to  pay ;  then  the  same  reason  ought  to  op- 
erate with  still  greater  force  against  his  several  promise  to  pay  the 
zvhole  price  of  goods  received  by  the  other.  But  the  law  in  the 
latter  case  is  well  settled  the  other  way. 

It  was  very  correctly  remarked  by  Whelply,  J.,  in  Hetfield 
et  al.  V.  Dozv,  above  cited,  that,  "'tO'  settle  the  rights  of  promisor's- 
inter  sese,  to  ascertain  as  hetiveen  t  lie  in  who  is  to  pay  the  debt 
ultimately,  is  no  part  of  the  object  of  the  act.  It  by  no  means 
follows  that  he  who  by  the  arrangement  between  the  promisors 
ultimately  may  be  bound  to  pay  the  debt  is,  as  to  the  promisee,  the 
principal  debtor.  That  does  not  concern  him."  This  view,  it 
seems  to  me,  rests  upon  sound  reasons — reasons  which  must  nat- 
urally enter  into  the  consideration  of  business  men,  in  the  ordinary 
transactions  of  business.  Where  a  parts  has  been  willing  to  put 
himself  in  the  position  of  an  original  promisor  (either  jointly  or 
severally)  to  a  vendor  for  goods  purchased  for  the  benefit  of,  or 
delivered  to,  another,  the  vendor  has  a  right  conclusive!}^  to  pre- 
sume that  such  relations  or  arrangements  exist  between  the  two 
as  to  make  it  the  duty  of  the  party  or  parties  promising,  as  between 
themselves,  to  pay  according  to  the  promise.  And  to  allow  the 
contrary  to  be  shown  to  defeat  the  promise  would  operate  as  a 
fraud  upon  the  vendor. 

The  question  of  a  joint  promise  appears  to  have  been  seldom 
raised  for  adjudication  in  connection  with  the  statute  of  frauds; 
but  the  following  cases  fully  sustain  the  proposition  that  a  joint 
promise  of  two,  whether  to  pay  the  pre-existing  debt  of  one  of 
them,  or  a  debt  contracted  at  the  time  for  his  benefit  (as  for  goods 
bought  for  and  delivered  to  the  one),  does  not  come  within  the 
statute,  but  it  is  an  original  promise,  as  between  them  and  the 
promisee,  and  valid  without  writing:  Ex  parte  Lane,  i  De  Gex. 
300;  Wainwriglit  v.  Straw,  15  Vt.  215  ;  Stone  v.  Walker,  13  Gray, 
613;  and  Hetfield  v.  Dozv,  3  Dutcher  ^40.     See  also  b\'  analogy 


130  .  GUARANTY  AND  SURETYSHIP. 

Batsoii  V.  Ki}ig,  4  H.  &  X..  739.  The  same  doctrine  is  laid  down 
by  Mr.  Browne  in  his  able  treatise  on  the  statute  of  frauds :  Ch.  10, 
Sec.  197. 

It  is  true  that  in  ll'aiircr'glit  v.  Straw,  which  most  resembles 
the  present  case,  the  decision  is  placed  in  part  upon  the  ground 
that  the  sale  was  made  to  both.  The  facts  were  that  Straw  and 
Cunningham  both  went  to  plaintiff's  store  and  said  they  wished 
to  .Iniy  a  stove  for  Straw,  but  that  both  would  be  responsible.  Now, 
I  can  see  no  difference  in  legal  eft'ect  between  the  case  where  A 
and  B  say  to  a  merchant,  "We  want  to  buy  a  stove  for  B,  and  both 
of  us  will  be  responsible,"  and  the  case  where  A  says,  "B  wishes 
to  purchase  a  stove,  but  we  will  both  be  responsible."  Substan- 
tially,  the  transaction  is  the  same;  in  both  cases  alike  it  is  a  sale 
for  the  benefit  of  the  one  on  the  joint  credit  of  the  two,  and  the 
real  question  in  both  cases  is.  whether  the  credit  was  given  to  both 
jointly.  I  do  not  think  the  court,  in  IVnijiicright  v.  Sfm-c.  based 
their  decision  upon  the  narrow  and  merely  verbal  ground  of  the  use 
of  the  first  person  plural,  showing  merely  who  wanted  the  stove,  but 
u]:ion  the  broad  ground  above  stated,  that  it  was  sold  upon  their 
joint  credit.  And  in  all  such  cases  where  the  sale  is  upon  the 
joint  credit  and  promise  of  the  defendants,  though  the  property 
is  purchased  for  and  delivered  to  but  one  of  *hem,  I  think  the 
legal  effect  of  the  transaction  constitutes,  as  between  them  and  the 
vendor,  a  sale  to  the  two  jointly.  The  sale  as  between  the  vendor 
and  the  vendee  is  to  the  party  or  parties  to  whom  the  credit  is 
given  for  the  price,  w-ithout  reference  to  the  question  for  whose 
use  it  is  purchased,  or  who,  as  between  the  promisors,  is  to  be  its 
owner  when  bought. 

This  brings  us  to  another  point  in  the  case.  The  sale  (if  upon 
the  joint  credit  and  promise  of  the  defendants)  was  a  joint  sale 
to  both,  as  between  them  and  the  plaintiff.  But  in  the  special 
count  of  the  declaration  it  is  alleged  as  a  sale  to  Daily  only.  The 
plaintiff  cannot,  therefore,  recover  upon  the  special  count. 

But  upon  the  count  for  goods  sold  and  delivered,  the  sale 
having  been  made  to  both,  the  plaintiff  would  be  entitled  to  re- 
cover? if  the  facts  be  such  as  would  warrant  a  recovery  upon  a  sale 
made  for  the  joint  benefit  of.  and  the  property  delivered  to  both. 

I  think  there  was  no  error  in  tlie  charge  or  proceedings  of 
the  court  below,  and  that  the  judgment  should  be  afifirmed,  with 
co.sts. 


Note— The  concurring  opinion  of  Cami'hf.i.i..   1..  and  that  part  of   the  opinion  of 
Christiancy,  J.,  relatinc  to  questions  other  than  tin-  statute  of  frauds,  are  omitted. 


MANLEY  VS.    GEAGAN-.  131 

Manley,  Adm'strix,  z^s.  Geagan    (1870). 
105  Mass.  -^45. 

Contract  by  the  administratrix  of  Edwin  Manley  upon  an 
oral  promise  to  pay  the  following  order: 

"Fall  River,  October  9,  1868. 
"Nicholas   T.   Geagan. 

"Sir:  Please  to  pay  Edwin  Manley  thirteen  hundred  and  fifty- four 
dollars  for  work  on  your  house,  corner  of  Bedford  and  Twelfth  streets,  and 
charge  the  same  to  account  of  H.  B.  Borden  &  Co." 

The  answer  denied  all  the  plaintiff's  allegations,  and  pleaded 
want  of  consideration,  and  the  statute  of  frauds. 

The  trial  was  in  the  superior  court,  without  jury,  before  Pit- 
man^ ].,  who  made  the  following  report  of  the  case  for  the  deter- 
mination of  this  court : 

"The  plaintiff"  proved  that  her  intestate,  in  whose  favor  the 
order  was  drawn,  did  work  as  a  stone  mason  on  a  block  of  build- 
ings belonging  to  the  defendant,  and  which  he  was  then  erecting, 
prior  to  the  time  of  drawing  this  order.  It  appeared  that  the 
whole  contract  was  taken  by  H.  B.  Borden  &  Co.,  who  employed 
the  plaintiff's  intestate  to  do  the  mason  work,  and  that  there  was 
no  contract  between  the  plaintiff's  intestate  and  the  defendant, 
and  no  employment  by  the  defendant ;  that  after  the  work  was 
done  the  defendant  sent  word  to  the  plaintiff's  intestate  to  get  an 
order  from  Borden  &  Co.  on  him,  adding,  T  am  going  to  pay  all 
off  on  the  loth,  and  am  not  going  to  trust  Borden  &  Co.  to  pay  it; 
I  am  going  to  see  the  help  all  paid ;'  and  that  this  was  communi- 
cated to  the  intestate;  that  the  next  day  he  procured  the  order  in 
suit  and  presented  it  to  the  defendant ;  that  the  defendant  took 
it,  read  it,  said  it  was  all  right,  and  that  he  would  accept  it,  and 
pay  it  on  Monday ;  that  on  Monday  he  could  not  be  found,  was 
gone  out  of  town  for  a  week,  and  has  since  refused  to  pay  it.  The 
defendant  who  was  called  as  a  witness  by  the  plaintiff,  testified 
that  he  owed  H.  B.  Borden  &  Co.  nothing  at  the  time  when  this 
order  was  presented;  and  I  find  as  a  fact  that  'it  is  not  proved 
that  he  actually  did  owe  them  anything.  The  defendant  offered 
no  evidence. 

"Upon  the  above,  the  court  ruled  that  the  promise  of  the 
defendant,  being  an  oral  promise  to  pay  the  debt  of  another,  and- 
being  also  without  any  consideration,   no  action  could  be  main- 


132  -  (ilARANTV   AND   SUKICTVSI I  1  1'. 

tained  on  it,  and  thereupon  found  for  the  defendant.  If  this 
ruHng  is  wrong-,  a  new  trial  is  to  l)e  had;  otherwise,  judgment  on 
the   verdict." 

•      /.  C.  Blaisdcll.  for  ihr  plaintiff. 

J.  M.  Morton.  Jr..  for  the  defendant. 

Gkav,  J.  The  promise  of  the  defendant  was  to  pay  for  work 
already  done  hv  the  intestate  for  T.orden  &  Comi^any,  without  any 
previous  contract  with  or  (.■ni])lo_\  nient  Ity  tlif  defendant.  I  he 
defendant  owed  liorden  &  Company  nothing,  and  received  no 
consideration,  either  from  I'.orden  &  Company  or  from  the  intes- 
tate for  his  promise.  The  intestate  neither  did  any  work  nor  paid 
any  money  upon  the  faith  of  this  promise,  nor  gave  up  any  right 
or  security  against  Borden  &  Company.  Their  original  liahility 
to  him  was  not  altered  or  affected  l)v  the  defendant's  ])romise. 
This  promise  was  therefore  clear! \-  a  ])romise  to  answer  for  the 
debt  of  another,  and.  not  being  in  writing,  was  within  the  statute 
of  frauds.  Gen.  Sts.  c.  105.  §  i.  cl.  2.  Stone  v.  Synnnes,  18 
rick.  467;  Cnrtis  v.  Broz^'ii,  5  Cush.  488;  luirhish  v.  Goodnow^ 
98  Mass.  296;  Browne  on  St.  of  Frauds,  §§   172-174. 

Judgment  on  the  verdict  for  the  defendant. 


KiRKUAM   r'-v.  Martku.   (1819). 
I  r.arn.  X:  Aid..  613. 

This  was  an  action  on  an  oral  ])romise.  The  plaintiff  declared 
that  one  T.  E.  Marter,  before  the  making  of  the  promise  of 
defendant,  had  without  the  leave  or  license  of  the  plaintiff,  wrong- 
fully ridden  a  horse  of  the  plaintiff's,  in  consequence  whereof  the 
horse  died  ;  that  the  plaintiff  had  threatened  to  commence  an  action 
against  said  T.  1^.  Marter  for  the  recovery  of  such  damages  as 
plaintiff  had  sustained  by  reason  of  the  premises ;  and  thereupon, 
in  consideration  of  the  premises,  and  that  the  plaintiff,  at  the  re- 
quest of  the  defendant,  would  not  bring  any  action  against  the 
said  T.  v..  .Marter  for  the  cause  aforesaid,  and  that  the  ])laintif¥ 
would  be  cdntenl  to  take,  for  and  on  account  of  said  horse,  what 


KIRKHAM    VS.    MARTER.  133 

should  be  agreed  upon  between  the  defendant  and  one  A.  B., 
defendant  promised  to  pay  plaintiff  what  should  be  agreed  upon 
between  defendant  and  said  A.  B.  for  and  on  account  of  said 
horse.  Plaintiff  further  declared  that  he  had  brought  no  action 
for  the  cause  aforesaid,  and  that  he  was  willing  to  take,  for  and 
on  account  of  the  horse,,  what  had  been  agreed  upon  between  the 
defendant  and  A.  B.,  and  that  defendant  and  A.  B.  did  agree  that 
defendant  should  pay  plaintiff  fifty  guineas  for  the  said  horse, 
and  the  bill  due  for  the  maintenance  and  keep  of  the  said  horse. 

Breach :  The  non-payment  of  the  said  several  sums. 

Plea :  General  Issue. 

On  the  trial  of  the  cause  the  plaintiff'  proved  an  oral  contract 
as  laid  in  the  declaration.  Abbott,  C.  J.,  thought  this  an  under-' 
taking  for  the  default  or  miscarriage  of  another  within  the  statute 
of  frauds,  and  consequently  that  the  promise  ought  to  have  i^een 
in  writing,  and  the  plaintiff  was  non-suited. 

Plaintiff  moved  for  a  new  trial. 

Abbott,  C.  J.  This  case  is  clearly  within  the  mischief  in- 
tended to  be  riemedied  by  the  statute  of  frauds,  that  mischief 
being  the  frequent  fraudulent  practices  which  were  too  commonly 
endeavored  to  be  upheld  by  perjury ;  and  if  it  be  within  the  mis- 
chief I  think  the  words  of  the  statute  are  sufficiently  large  to  com- 
prehend the  case.  The  words  are  these:  "No  action  shall  be 
brought  to  charge  a  defendant  upon  any  special  promise  to  answer 
for  the  debt,  default  or  niiscarriage  of  another  person."  Now  the 
word  "miscarriage"  has  not  the  same  meaning  as  the  word  "debt" 
or  "default" ;  it  seems  to  me  to  comprehend  that  species  of  wrong- 
ful act  for  the  consequences  of  which  the  law  would  make  the 
party  civilly  responsible.  The  wrongful  riding  the  horse  of  an- 
other, without  his  leave  and  license,  and  thereby  causing  its  death, 
is  clearly  an  act  for  which  the  party  is  responsible  in  damages  and 
therefore,  in  my  judgment,  falls  within  the  meaning  of  the  word 
"miscarriage."  The  case  of  Reed  and  Nash  (i  Wilson,  305),  is 
very  distinguishable  from  this  :  The  promise  there  was  to  pay  a  sum 
of  money  as  an  inducement  to  withdraw  a  record  in  an  action  of 
assault,  brought  against  a  third  person.  It  did  not  appear  that 
the  defendant  in  that  action  had  ever  committed  the  assault,  or 
that  he  had  ever  been  liable  in  damages ;  and  the  case  was  ex- 
pressly decided  on  the  ground  that  it  was  an  original,  and  not  a 
collateral  promise.     Here  the  son  had  rendered  himself  liable  by 


134  GUARANTY  AND   SUKETVSHIP. 

his  wroiii^ful  act,  and  the  promise  was  expressly  made  in  consid- 
eration of  the  plaintiff's  forbearing  to  sue  the  son.  I  therefore 
think  that  the  nonsuit  was  right. 

J\ule  refused.^ 

Note— The  concurrinj;  opinions  of  judges  are  omitted. 


The   People   of  the   State  of  New   York.   Respondent,   vs. 
Backus  et  a!.,  Appellants   (1889). 

117  X.  Y.  196;  22  N.  E.  759. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  Third  Judicial  Department,  entered  upon  an  order 
made  Fel)ruarv  5.  1889.  which  affinned  a  judgment  in  favor  of 
plaintiff,  entered  upon  the  report  of  a  referee. 

This  action  was  brought  by  the  people  against  the  defend- 
ants as  guarantors  upon  the  following  bond  or  contract  of  the 
National  Bank  of  Auburn,  to-wit : 

"Whereas  certain  moneys  of  the  State  of  New  York  have  been  and 
are  proposed  to  be  deposited  in  the  First  National  Bank  of  Auburn,  under 
the  direction  of  the  comptroller  of  the  state,  by  the  agent  and  warden  of 
Auburn  prison,  to  the  credit  of  the  treasurer  of  the  state,  for  safekeeping 
and   for   interest. 

"Now,  therefore,  the  said  First  National  Bank  of  Auburn,  in  consider- 
ation of  such  deposits  and  for  value  received,  does  hereby  agree  to  pay  on 
demand,  to  the  order  of  the  state  treasurer,  or  other  officer  of  the  state 
having  lawful  authority  to  demand  the  same,  such  deposits,  and  any  and 
all  parts  thereof,  together  with  interest  on  daily  balance,  at  the  rate  of 
three  per  cent. 

"Witness  the  seal  of  said  Bank  and  the  signature  of  its  president  and 
cashier,  tliis  14th  day  of  Tune,  1880." 

The  guaranty  was  as  follows : 

"In  consideration  of  the  making  the  deposits  by  the  people  of  the 
State  of  New  York  in  the  First  National  Bank  of  Auburn,  in  the  agree- 
ment mentioned,  and  for  value  received,  we,  the  undersigned,  Clinton  T. 
Backus,    Manson    F.    Backus,   James    Kerr   and    William    E.    Hughitt,    do 

'To  the  same  effect  are :  Turner  v.  Hubbell,  2  Day,  457 ;  Baker  v.  Mor- 
ris, 33  Kan.  580,  s.  c.  7,  P.  267. 


PEOPLE,  ETC.,  VS.  BACKUS.  135 

hereby  jointly  and  severally  guarantee  the  full  and  punctual  performance 
of  the  condition  of  said  agreement  on  the.  part  of  said  bank,  and  that  all 
such  deposits  and  interest  shall  be  fully  paid  on  legal  demand.  The  said 
guarantors  may  serve  upon  the  comptroller  a  written  notice,  terminating 
or  limiting  their  liability  under  this  guaranty,  after  a  date  to  be  specified 
in  said  notice,  which  shall  not  be  less  than  ten  days  after  the  service  of 
said  notice." 

The  agent  and  warden  was  by  law  the  official  manager  of 
the  state  prison  at  Auburn,  and  was  requested  to  deposit  all  moneys 
credited  by  him  each  week  to  the  credit  of  the  treasurer  of  the  state, 
in  a  bank  located  at  Auburn,  and  send  to  the  comptroller  weekly  a 
statement  showing  the  amount  so  received,  and  from  whom  or 
where  received  and  deposited,  and  the  days  on  which  such  de- 
posits were  made,  such  statement  to  Ije  certified  by  the  proper 
officer  of  the  bank  receiving  such  deposits.  The  agent  and  war- 
den was  required  to  verify  by  his  affidavit  that  the  sum  so  de- 
posited was  all  the  money  received  by  him  from  whatever  source 
of  prison  income  during  the  week  and  up  to  the  time  of  the 
deposit,  and  all  moneys  so  deposited  by  him  were  subject  to  the 
quarterly  drafts  of  the  treasurer  of  the  state.  The  law  required 
that  any  bank  in  which  deposits  should  be  made  should,  before 
receiving  any  such  deposit,  hie  a  bond  with  the  conq^troller  of 
the  state,  subject  to  his  approval,  for  such  sum  as  he  should  deem 
necessary.  §  50,  Chap.  460,  L.aws  of  1847,  as  amended 
by  Chap.  58,  Laws  of  1854,  and  Chap.  599,  Laws  of  i860.  By 
section  6  of  Chapter  177  of  the  Laws  of  1877,  it  was  provided 
that  "The  system  of  labor  in  rhe  state  prisons  shall  be  by  contract 
or  by  the  state  or  partly  by  one  system  and  partly  by  the  other, 
as  shall  in  the  discretion  of  the  superintendent  be  deemed 
best."  From  the  time  of  the  execution  of  the  bond  until  Decem- 
ber, 1884,  the  business  of  the  Auburn  state  prison  was  carried 
on  under  what  was  known  as  the  contract  system.  Ba-  chapter 
21  of  the  Laws  of  that  year,  the  renewal  of  the  then  existing  con- 
tracts, or  the  making  of  new  contracts  for  convict  labor,  was 
prohibited  and  after  that  the  prisoners  were  employed  in  manu- 
facturing on  state  account.  The  bank  was  incorporated  under  the 
National  Bank  Act  of  1863,  on  the  31st  day  of  December  of  that 
year,  and  by  its  articles  of  association  it  was  provided  that  it 
should  conjtinue  until  the  25th  day  of  February,  1883  unless 
sooner  dissolved  by  the  act  of  a  majority  of  the  stockholders 
thereof.     By  the  Act  of  Congress,  passed  July  12,  1882,   (U.  S. 


18t:5  (;^Al^\^•TV  \xd  siki-tn  sirii'. 

Stats,  at  I.ari^v,  X'ol.  22,  p.  162,)  .\atii)iial  l)an!^s  were  authorized 
to  extend  their  corporate  existence;  and  in  January,  1883,  such 
proceedings  were  taken  under  that  act  as  to  extend  the  charter  of 
the  hank  and  its  corporate  existence  until  the  J4th  (kiy  of  Feb- 
ruarv.  1903  \\y  section  4  of  that  act  it  is  provided  that  "any 
association  so  extending  the  period  of  its  existence  shall  continue 
to  enjov  all  the  rights  and  privileges  and  immunities  granted,  and 
shall  continue  to  be  subject  to  all  the  duties,  liabilities  and  restric- 
tions imposed  bv  the  Revised  Statutes  of  the  United  States,  and 
other  acts  having  reference  to  national  banking  associations,  and 
it  shall  continue  to  be  in  all  respects  the  identical  association  it  was 
before  the  extension  of  its  period  of  existence." 

.\ftcr  the  giving  of  the  bond  by  the  bank  and  the  guaranty 
by  the  defendants,  the  agent  and  warden  of  the  prison  made 
deposits  in  the  banlc,  from  time  to  time,  down  to  l''ebruar\-.  1888, 
on  which  day  there  was  upward  of  $65,000  on  deposit  in  the  bank, 
which  it  refused  and  neglected  to  pay  upon  the  draft  of  the  State 
Treasurer,  it  having  become  insolvent,  and  this  action  was  brought 
against  the  defendants,  as  sureties,  to  recover  the  amount  remain- 
ing on  deposit. 

irilliaiii    I'.    C(^gs7i'cll.   for  a])pellant. 

Charlrs  P.   labor.  attorne}-general,   for  resi)ondent. 

Earlk,  J.  Xo  citation  of  authorities  is  needed  to  show  that 
the  contracts  of  sureties  are  to  be  construed  like  odier  contracts 
so  as  to  give  effect  to  the  intention  of  the  parties.  In  ascertain- 
ing that  intention  we  are  to  read  the  language  used  by  the  parties 
in.  the  light  of  the  circumstances  siuTounding  the  execution  of  the 
instrument,  and  when  we  have  thus  ascertained  their  meaning 
we  are  to  give  it  effect.  lUit  when  the  meaning  of  the  language 
used  has  been  thus  ascertained,  the  resi)onsibility  of  the  surety  is 
not  to  be  extended  or  enlarged  1)\-  !m])lication  or  construction, 
and  is  strictissiiiii  juris. 

After  the  contract  system  in  the  state  ijrisons  was  abolished, 
and  manufacturing  therein  could  be  done  only  on  state  account, 
the  amount  of  money  deposited  in  this  bank  by  the  agent  and 
warden  largely  increased,  and  it  is  now  claimed  on  behalf  of  the 
defendants  that  their  responsibility  as  sureties  was  largely  ex- 
tended beyond  what  was  contemi)lated  at  the  time  of  the  execu- 
tion of  their  truarantv,  and  that  the\-  are  therefore  discharged. 


feoplf;,  etc.,  vs.  b.\ckus.  137 

By  the  statiite.s  in  force  at  the  time  of  the  execution  of  the 
bond  and  guaranty,  the  agent  and  warden  of  the  prison  was  re- 
quired to  deposit  all  tlie  moneys  received  by  him  from  any  source 
in  the  bank,  h  is  not  reasonable  to  suppose  that  the  sureties, 
when  they  signed  their  guaranty,  had  in  mind  the  particular  source 
from  which  the  agent  and  warden  received  the  money.  They 
must  have  known  that  they  became  responsible  for  all  the  moneys, 
from  whatever  source,  coming  into  his  hands  to  be  deposited.  It 
cannot  be  supposed  that  they  had  in  mind  that  the  system  of  lal)or 
then  in  force  at  the  prison  would  remain  unchanged  for  an  indefi- 
nite time,  or  that  they  cared  anything  about  it.  Much  stress  is  laid 
upon  the  words  in  the  bond,  "certain  moneys,"  which  had  been 
and  were  proposed  to  be  deposited.  We  think  those  words  have 
reference  to  the  moneys  to  be  deposited  by  the  agent  and  warden 
of  the  prison,  as  distinguished  from  other  moneys  of  the  state. 
They  were  intended  to  point  out  the  source  from  which  the  moneys 
of  the  state  to  be  deposited  should  come ;  and  the  words  "such 
deposits,"  used  later  in  the  bond,  have  reference  to  the  deposits 
to  be  made  by  the  agent  and  warden  of  the  prison.  So,  the  bond, 
in  the  most  general  terms,  covers  and  applies  to  all  the  money 
to  he  deposited  in  the  bank,  under  the  direction  of  the  comptroller 
of  the  state,  by  the  agent  and  warden  of  the  prison.  The  words 
"certain  moneys"  and  "such  deposits"  do  not  indicate  that  the 
parties  then  had  in  mind  the  source  from  which  the  agent  and 
warden  should  receive  his  money,  or  the  particular  moneys  which 
he  had  theretofore  deposited.  But  they  manifestly  have  reference 
to  all  the  moneys  which,  under  the  direction  of  the  Comptroller, 
he  might  deposit  in  the  liank.  The  bank  desired  to  get  all  the 
deposits  it  could,  and  the  defendants,  who  were  directors  and 
officers  of  the  bank,  desired  to  secure  all  the  deposits.  It  cannot 
be  supposed  that  they  contemplated,  at  the  time  they  signed  their 
guaranty,  that  their  liability  was  to  be  limited  or  restricted  to 
the  amounts  which  had  been  previously  deposited,  or  that  those 
amounts  had  any  influence  whatever  upon  their  action.  They 
must  therefore  be  held  to  the  plain  language  of  their  guaranty, 
and  in  holding  that  it  covers  moneys  deposited  subsequently  to 
1884.  we  do  not  extend  their  responsibility  by  implication  or 
construction,  but  simply  hold  them  to  the  responsibility  plainly 
expressed  in  the  language  of  the  bond  and  the  guaranty. 

It  is  still  further  claimed,  on  the  part  of  the  defendants,  that 
thev    are    discharged    from    anv    liability    on    their    guaranty    on 


138  GUARANTY  AND   SLJRKTVSII  IP. 

account  of  the  extension  of  the  existence  of  the  corporation  in 
1883,  before  any  default  on  the  part  of  the  bank,  and  for  this 
contention  the  learned  counsel  for  the  defendants  cites  Thompson 
V.  Young,  2  Ohio,  334 ;  Union  Bank  v.  Ridgcley,  i  H.  &  G.  324 ; 
Bank  of  Washington  v.  Barringlon,  2  Pa.  27;  Brown  v.  Latimore, 
17  Cal.  93.  None  of  those  cases  are  precisely  like  this  in  their 
circumstances,  Init  so  far  as  they  uphold  the  contention  of  the 
defendants  we  are  quite  uiiwillini^  to  follow  them.  The  contrary 
doctrine  was  held  in  Exeter  Bank  v.  Rogers,  7  N.  H.  21  ;  and 
we  think  our  decision  in  National  Bank  of  Poughkeepsie  v.  Phelps, 
97  N.  Y.  44,  is  ample  authority  for  the  maintenance  of  this  re- 
covery, notwithstanding  extension  of  the  corporate  existence  of 
the  bank.  In  the  latter  case,  under  the  provisions  of  the  National 
Banking  Act  and  of  chapter  97  of  the  Laws  of  1865,  the  state 
bank  was  transformed  into  a  national  bank,  and  it  was  held  to  be 
but  a  continuance  of  the  same  body  under  a  changed  jurisdiction; 
tha.t  l)etween  it  and  those  who  had  contracted  w'ith  it,  it  retained 
its  identity  and  might,  as  a  national  bank,  enforce  contracts  made 
with  it  as  a  state  bank  ;  that  where  a  state  bank,  at  the  time  of  its 
change  to  a  national  bank,  held  a  continuing  guaranty  of  loans 
made  by  it  upon  the  strength  of  which  it  had  made  loans,  and 
after  the  change  had  made  further  advances,  an  action  was  main- 
tainable by  the  national  bank  upon  the  guaranty,  and  that  the  guar- 
antor was  liable  for  the  loans  made,  both  before  and  after  the 
change.  Here  a  new  corporation  was  not  formed ;  but  there  was 
a  -mere  prolongation  of  the  existence  of  the  same  corporation 
whose  corporate  identity  was  not  changed  or  lost.  The  bank 
which  defaulted  was  the  same  bank  for  which  the  defendants  be- 
came bound.  There  were  not  two  banks  in  succession,  but  all 
the  time  one  bank.  Its  charter  was  amended  so  as  to  extend  its 
existence;  and  in  the  original  national  banking  act  (§  67), 
it  was  provided  that  Congress  could,  at  any  time,  "amend,  alter 
or  repeal  this  act."  It  would  certainly  be  a  very  inconvenient 
rule  to  hold  that  all  the  contracts  of  sureties  to  the  bank,  and  of 
sureties  by  the  bank,  to  other  persons  should  be  destroyed  by 
every  material  change  or  alteration  in  its  charter.  The  contract 
was  entered  into  by  the  sureties  with  knowledge  of  this  law,  and 
it  became  a  part  of  their  contract  as  if  they  had  stipulated  that 
the  changes  or  alterations  might  be  made.  The  act  of  1882  was  a. 
mere  amendment  or  alteration  of  the  previous  banking  act. 


jgfiBiyE.  Carter 


STARR  VS.    MIT.LTKTN. 


139 


We  do  not  deem  it  important  to  consider  the  effect  that  should 
be  given  to  the  fact  that  these  various  defendants,  as  officers  of 
the  bank,  procured  the  extension  of  its  existence,  of  which  they 
now  seek  to  take  advantage. 

For  the  reasons  we  have  already  given,  and  those  so  well 
expressed  in  the  opinion  of  the  learned  referee  before  whom  the 
case  was  tried,  we  think  the'  judgment  should  be  affirmed,  with 
costs. 

All  concur. 

Judgment  affirmed. 


Starr  et  al.  vs.  Milltkin  (1899), 
180  111.  458;  54  N.  E.  328. 

Appeal  from  the  Appellate  Court  for  the  Third  District;— 
heard  in  that  court  on  appeal  from  the  Circuit  Court  of  Macon 
county;  the  Hon.  Edward  P.  Vail,  J.,  presiding. 

LeForgcc  &  Lcc,  and  Mills  Bros.,  for  appellants. 

/.  A.  Buckingham  and  Hugh  Crca,  for  appellee. 

Mr.  Justice  Phillips  delivered  the  opinion  of  the  court: 

Suit  was  brought  in  the  Circuit  Court  of  Macon  county  by 
William  H.  Starr  and  Isaac  R.  Mills,  for  the  use  of  William  H. 
Starr,  against  James  Millikin,  upon  the  following  contract: 

"Whereas,  Murray  G.  Millikin  has  purchased  of  Starr  &  Mills  lot 
sixteen  (16)  and  fifteen  feet  off  of  the  east  side  of  lot  fifteen  (15),  in 
block  three  (3),  in  Starr' &  Mills'  addition  to  the  city  of  Decatur,  for 
the  sum  of  $800;  and  whereas,  the  said  Murray  G.  Millikin  has  given  to 
the  said  Starr  &  Mills  his  certain  promissory  notes  to  secure  the  payment 
of  said  consideration,  together  with  a  mortgage  upon  said  premises;  and 
whereas,  the  said  Murray  G.  Millikin  is  a  minor  under  the  age  of  twenty- 
one  years  but  is  desirous  of  having  the  deed  to  said  lots  so  purchased 
made  to  him : 

"Now,  therefore,  in  consideration  of  the  premises  and  in  considera- 
tion of  the  making  of  the  deed  direct  to  the  said  Murray  G.  Millikin,  I, 
James  Millikin,  do  hereby  guarantee  that  the  said  Murray  G.  Millikin 
will  ratify  said  purchase  and  the  giving  of  said  notes  upon  his  arrival  at 


140  GUARANTY  AXD   STRKTYSHl  I'. 

the  age  of  twenty-one  years,  in  such  manner  as  will  make  him  personally 
liable  on  said  notes  so  given  for  said  purchase  money,  and  in  the  event 
that  said  Murray  G.  Alillikin  shall  repudiate  or  refuse  to  pay  said  notes 
1  hereby  agree  to  pay  the  same  to  the  said  Starr  &  Mills,  or  their  assigns. 
"Daled  at  Dccatin-.   Illinois,  this  _'6th  day  of  Juiu-.  A.   D.   1893. 

JamKS    MlI.I.IKlN." 

A  verdict  was  rclunu-d  in  the  trial  court  aj^ainst  ajjpcllcc  for 
$1076.88.  Judgment  was  rendered  on  this  verdict,  ])ut  on  appeal 
to  the  Ai)pellate  Court  for  the  Third  District  the  judgment  was 
reversed  witliout  renianchng,  the  Ap])ellate  Court  at  the  same  time 
making  a  finchng  of  facts  to  be  recited  in  its  final  order. 

The  Appellate  Court  found  from  the  evidence  in  the  case  that 
James  Aliliikm  undertocjk.  in  the  contract  above  mentioned,  to  pay 
the  sum  of  money  therein  mentioned  upon  condition,  only,  that 
Murray  ( ;.  Alillikin.  a  minor,  upon  his  arrival  at  the  age  of  twentv- 
one  years,  would  fail  to  ratify  the  notes  in  controversv  in  such 
manner  as  would  make  him  personally  liable,  or  if  the  minor  should 
repudiate  or  refuse  to  pay  the  notes  on  account  of  tlieir  having  been 
executed  during  his  minority.  Idiis  finding  of  facts  was  the  re- 
sult of  the  legal  construction  given  the  contract  by  the  Appellate 
Court.  Tliat  court  also  found  as  a  fact  arising  out  of  the  evidence, 
that  ui)on  liis  arrival  at  the  age  of  majority  Murray  G.  Millikin  did 
ratify  the  notes  made  by  him,  thus  making  himself  personally 
liable,  and  that  he  did  not  repudiate  or  refuse  to  pav  them  on  ac- 
count of  their  having  been  executed  during  his  minority.  As  this 
record  is  presented  to  us,  therefore,  only  one  question  is  involved. 
This  is  conceded  by  coimsel  for  appellants,  as  they  say  that  the 
construction  to  be  placed  upon  this  contract  is  the  onlv  real  ques- 
tion involved  in  the  litigation  in  this  court,  and  that  this  (piestion, 
Avhen  fletermined,  ends  the  controversv. 

The  finding  by  the  Appellate  Court  as  to  the  legal  construction 
to  be  given  this  contract  is  not  such  a  finding  of  fact  is  is  binding 
upon  this  court.  The  construction  to  l)e  given  a  contract  is  one 
of  law,  rather  than  of  fact.  However,  that  is  not  material  in  this 
case,  as  we  in  nowise  differ  from  the  Ajjpellate  Court  as  to  the 
legal  construction  to  be  given  the  contract.  Starr  &  Mills  were 
conveying  some  property  to  Murray  G.  Millikin,  a  minor.  From 
the  fact  that  u])on  his  arrival  at  his  majority  he  would  have  the 
right,  in  law,  to  repudiate  the  notes  or  refuse  payment  on  account 
of  their  having  been  executed  during  liis  minority,  this  separate 
contract  was  executed  to  guarantee  there  should  be  no  such  re- 


DAVIS  VS.   PATRICK.  141 

fusal  or  repudiation.  Tiie  entire  controversy  occurs  over  the  last 
clause  of  the  Contract,  which  reads :  "In  the  event  that  said  Murray 
G.  Millikin  shall  repudiate  or  refuse  to  pay  said  notes  I  hereby 
agree  to  pay  the  same  to  said  Starr  &  Mills,  or  their  assigns."  This 
clause,  however,  when  taken  in  connection  with  all  the  circum- 
stances of  the  case  and  the  recitals  in  the  contract  preceding  this 
clause,  to  the  effect  that  Murray  G.  Millikin  was  a  minor  under 
the  age 'of  twenty-one  years  and  that  he  was  desirous  of  having 
the  deeds  to  the  lots  made  to  him,  and  that  appellee  guaranteed 
Murray  G.  Millikin  would  ratify  such  purchase  and  the  giving  of 
said  notes  upon  his  arrival  at  the  age  of  twenty-one  years,  tends  to 
establish,  without  question,  that  the  only  purpose  of  the  execution 
of  this  contract  was  that  the  notes  should  not  be  repudiated  or  pay- 
ment refused  on  accotmt  of  the  age  of  the  maker.  It  is  evident 
that  there  was  no  intention  on  the  part  of  James  Millikin  to  per- 
sonally guarantee  the  payment  of  this  indebtedness.  The  parties 
connected  with  the  transaction  were  all  business  men. — one  a 
banker,  another  a  lawyer, — and  if  the  intention  had  been  to  per- 
sonally guarantee  this  indebtedness  such  guaranty  would  have 
been  on  the  back  of  the  note,  or  as  a  joint  maker,  or  in  some  other 
manner  much  less  cumbersome  than  as  shown  by  this  record. 

The  construction  given  this  contract  by  the  Appellate  Court 
was  the  correct  one.  and  the  judgment  of  that  court  will  be 
afifimied. 

Judgment  affirmed. 


Davis  z'.?.  Patrick   (1891). 
141  U.  S.  479 ;  L.  Ed'n.  Bk.  35  826. 

The  case  was  stated  by  the  court  as  follows : 

This  case  was  commenced  on  the  24th  day  of  November,. 
1880.  by  the  filing  of  a  petition  in  the  District  Court  of  Knox 
county,  Nebraska.  Subsequently  it  w'as  removed  to  the  Circuit 
Court  of  the  United  States,  and  at  the  May  term,  1883.  of  that 
court  a  judgment  was  rendered  in  favor  of  the  plaintiff.  That 
judgment  was  reversed  by  this  court,  at  its  October  temi,  1886. 
Davis  V.  Patrick,  122  U.  S.  138.  A  second  trial  in  January.  1890, 
resulted  in  another  verdict  and  jvidgment   for  the  plaintiff,  and 


142  GUARANTY  AND   SURETYSHIP. 

again  the  defendant  alleges  error.  The  petition  counts  on  two 
causes  of  action.  No  question  is  made  by  counsel  for  plaintiff  in 
error  with  respect  to  the  first  count  or  the  rulings  thereon — the 
only  error  alleged  being  in  reference  to  the  second  count.  That 
count  is  for  the  transportation  of  silver  ore  from  tlie  Flagstaff 
mine,  in  Utah  Territory,  to  furnaces  at  Sandy,  in  the  same  Terri- 
tor}'.  In  the  first  trial  it  was  claimed  that  Uavis,  the  defendant, 
was  the  real  owner  of  the  Flagstaff  mine,  and  therefore  primarily 
responsible  for  all  debts  contracted  in  its  working.  The  relations 
between  Davis  and  the  Flagstaff  Mining  Company  were  disclosed 
by  a  written  agreement,  of  date  December  16,  1873.  ^Y  that 
agreement  it  appeared  that  Davis,  on  June  12,  1873,  ^^^^  advanced 
to  the  Company  £5,000,  at  tlie  rate  of  6%  interest,  a  sum  tlien 
due;  that  it  had  sold  to  Davis  and  agreed  to  deliver  at  the  ore- 
house  of  the  Company,  free  of  cost,  5,195  tons  of  ore,  of  which  it 
had  only  then  delivered  200  tons,  although  Davis  had  paid  in 
full  for  the  entire  amount.  The  agreement  also  recited  that  Davis 
was  to  advance  an  additional  amount,  if  needed,  not  exceeding 
i  10,000.  It  then  provided  that  the  mine  should  be  put  under 
the  sole  management  of  J.  N.  H.  Patrick,  to  be  worked  and  con- 
trolled by  him  until  such  time  as  the  ore  sold  had  been  delivered 
and  the  sums  borrowed  had  been  repaid,  with  interest.  This 
control  was  irrevocable,  save  at  the  instance  of  Davis.  Coupled 
wMth  this  agreement  was  a  full  power  of  attorney  to  Patrick. 
This  court  held  that  such  contract  establisiied  between  Davis  and 
the  Mining  Company  simpl\-  the  relation  of  creditor  and  debtor, 
and  did  not  make  him  in  any  true  sense  the  owner.  For  the 
erroneous  rulings  of  the  trial  court  in  this  respect,  the  judgment 
was  reversed.  In  the  second  trial,  this  construction  of  the  rela- 
tions of  Davis  to  the  FlagstafI'  Mining  Company  was  followed  by 
the  court,  and  the  jury  instructed  that  the  contract  put  in  evidence 
between  Davis  and  the  Mining  Company  created  simply  the  rela- 
tions of  creditor  and  debtor,  and  did  not  make  the  former  liable 
for  expenses  created  in  working  and  operating  the  mine;  and  the 
trial  proceeded  upon  the  theory  that  during  the  time  the  services 
sued  for  were  being  rendered,  13avis  was  the  party  mainly  and 
pecuniariK-  interested  in  the  workings  of  the  mine,  and  that  he 
assumed  to  Patrick  a  ])ersonal  responsibility  for  such  services; 
and  the  real  ([ucstion  tried  was  wliether  Davis'  promises  were  col- 
lateral undertakings  to  jiax-  the  debts  of  another,  and  void  because 
not  in  writing. 


DAVIS  VS.   PATRICK.  143 

(In  the  opinion  of  the  court,  post,  485-487,  some  of  the 
material  evidence  at  the  last  trial  is  set  forth.) 

Mr.  J.  M.  IVookcortli,  for  plaintitY  in  error. 

Mr.  John  L.  Webster,  for  defendant  in  error.  Mr.  Nathaniel 
Wilson  was  with  him  on  the  brief. 

Mr.  Justice  Brewer,  after  stating  the  case,  delivered  the 
opinion  of  the  court : 

That  Davis  was  interested  in  having  the  ore  transported 
to  the  furnaces  is  clear.  He  was  interested  in  two  respects :  First, 
as  to  the  4,995  tons  to  be  delivered  to  him  at  the  ore-house,  it 
being  his  property  when  thus  ^delivered,  any  subsequent  handling 
was  solely  for  his  benefit ;  and  in  respect  to  the  balance,  as  the 
transportation  was  one  step  in  the  process  of  converting  the 
product  of  the  mine  into  money,  it  w'ould  help  to  pay  the  debt  of 
the  Company  to  him.  Davis,  therefore,  w'as  so  pecuniarily  inter- 
ested in,  and  so  much  to  be  benefited  by,  the  prompt  and  success- 
ful transportation  of  the  ore,  that  any  contract  which  he  might 
enter  into  in  reference  to  it,  was  supported  by  abundant  considera- 
tion. We  proceed,  therefore,  to  inquire  what  he  said  and  did. 
After  the  execution  of  the  papers,  the  newly  appointed  manager 
took  possession  of  the  mine ;  and  in  the  fore  part  of  1874  the 
plaintiff  commenced  the  transportation  of  the  ore  under  contract 
with  the  agent  of  the  manager.  The  business  was  carried  on  in 
the  name  of  the  Mining  Company.  The  plaintiflf  understood  that 
Davis  was  interested  in  the  matter,  though  not  informed  as  to 
the  extent  of  the  interest,  or  the  terms  of  the  agreement  beween 
him  and  the  Mining  Company.  In  the  fall  of  1874  Davis  came 
to  Utah  to  examine  the  property.  He  was  introduced  by  the 
manager  to  the  foreman  of  plaintiff,  in  the  latter's  presence, 
as  the  boss  of  the  mine,  to  which  Davis  assented.  After  this, 
plaintiff,  who  had  not  received  his  pay  in  full  for  the  services 
already  rendered,  had  an  account  made  up  showing  the  balance 
due  him,  and  presented  it  to  Davis.  His  testimony  as  to  the 
conversation  which  followed  is  in  these  words :  "I  showed  it  to 
Mr.  Davis  and  told  him  I  was  not  getting  my  money,  and  Mr. 
Davis  said  my  account  was  all  right  and  he  would  be  personally 
responsible  to  me  for  the  money,  and  for  me  to  go  on  as  I  had  been 
doing  and  (\r^^x  as  little  money  as  I  could  get  along  with  to  pay  the 
men  and  the  running  expenses,  and  he  would  see  that  I  got  every 


144  Gl'AR.W'iV    WD   SURKTYSIIIP. 

dollar  of  my  money."  The  plaintiff's  cashier,  who  was  present  at 
this  conversation,  gives  this  as  his  recollection  of  the  conversa- 
tion : 

"O.  In  that  conversation  state  what  Mr.  Davis  said  alxuit 
I)eing  responsible  to  A.  vS.  Patrick  for  that  acconnt. 

"A.  Me  stated  to  Mr.  Patrick  in  my  presence  that  he  would 
personally  be  responsible  for  that  acconnt.  He  says,  "Vou  know, 
-M.,  I  practically  own  this  mine,  but  money  is  scarce  and  we  must 
get  what  you  can  out  of  the  mine.'  lie  says  we  are  making  large 
expenditures  for  improvements,  and  he  says  you  shall  have  all 
the  money  you  want  to  i)ay  your  men  and  expenses,  but  you 
nmst  wait  for  the  balance,  and  1  will  see  that  you  are  paid. 

"O.  What  did  he  say  in  that  connection  to  A.  S.  Patrick 
about  contimiing  on  in  the  hauling  of  the  ores? 

"A.  He  requested  him  to  continue  in  the  hauling  of  the 
ores.     He  requested  him  to  do  it. 

"(J.  In  resp(jnse  to  Mr.  Davis  to  that  recpiest  what  did  Mr. 
Patrick  say  ? 

"A.  He  said  to  ^Ir.  Davis,  if  he  waiuld  guarantee  him  to  be 
paid  he  would  continue  to  work,  and  Davis  said  he  would  see  him 
paid." 

After  this,  the  ])laintifT  continued  the  work  of  transportation 
until  the  fall  of  1875,  receiving  such  payments  from  time  to  time 
as  to  extinguish  the  amount  due  h.im  at  the  date  of  this  conversa- 
tion, and  leaving  a  Ixdance  more  than  covered  by  the  work  done 
in  1875,  and  it  is  only  for  work  done  after  these  promises  that 
this  recovery  was  had  and  in  respect  to  which  the  questions  pre- 
sented and  discussed  arise.  The  plaintifif  testified  to  another  con- 
versation, in  September,  1876,  in  the  city  of  New  York.  His 
account  of  that  conversation  is  given  in  these  words:  'TMaintifif 
told  Davis  that  his  brother  and  himself  wxre  hard  up  for  money, 
and  wanted  to  know  if  Davis  would  not  give  them  some  money  on 
the  'Flagstaff'  account,  for  hauling  the  ores.  Plaintiff  had  his 
account  with  him  and  showed  it  to  Davis.  Davis  said  the  whole 
of  the  account  was  all  right,  and  he  pro])osed  to  ])ay  the  account, 
and  said  he  would  pay  the  plaintiff,  i'laintift"  said  to  Davis  that 
if  he  would  give  him  some  money  on  the  account  it  would  help 
him  out.  l^avis  said  he  had  some  scxrurities  in  London  which  he 
was  going  to  sell,  and  would  have  some  money  in  a  few  days 
and   would  give  plaintiff  $5,000  on   the  account.     Plaintiff   said 


DAVIS  VS.   PATRICK.  145 

if  the  money  was  going  to  be  there  in  a  few  days  he  would  wait 
for  it,  but  Davis  said,  'Xo;  you  go  home  and  1  will  pledge  you 
my  word  that  I  will  telegraph  the  money  to  you  to  the  First 
National  Bank  by  the  first  of  October.'  " 

And,  again,  he  testified  to  an  interview  in  1877  with  Davis,  in 
the  city  of  Omaha,  in  the  presence  of  other  parties,  in  which  he 
said :  "Davis,  you  promised  all  along  to  pay  me  that  money,"  and 
Davis  replied,  "I  believe  I  did." 

This  testimony  of  plaintiff  as  to  conversations  with  defend- 
ant is  corroborated  by  other  witnesses  and  contradicted  by  none. 
It  must  therefore  be  accepted  as  presented  the  facts  upon  which 
this  case  must  be  determined.  Were  these  promises  binding  upon 
Davis,  or  of  no  avail  to  the  plaintiff  because  not  in  writing? 
Were  it  not  for  the  Statute  of  Frauds  there  would  be  no  question, 
for  obviously  there  was  both  promise  and  consideration.  Defend- 
ant relies  upon  that  provision  of  the  Statute  of  Frauds  which  for- 
bids the  maintenance  of  an  action  "to  charge  the  defendant  upon 
any  special  promise  to  answer  for  the  debt,  default  or  miscarriage 
of  another  person,  unless  the  agreement  upon  which  such  action 
shall  be  brought,  or  some  memorandum  or  note  thereof,  shall  be 
in  writing,"  etc.  The  purpose  of  this  provision  was  not  to  eft'ect- 
uate,  but  to  prevent,  wrong.  It  does  not  apply  to  promises  m 
respect  to  debts  created  at  the  instance  and  for  the  benefit  of 
the  promisor,  but  only  to  those  by  which  the  debt  of  one  party  is 
sought  to  be  charged  upon  and  collected  from  another.  The  rea- 
son of  the  statute  is  obvious,  for  in  the  one  case  if  there  be  any 
conflict  between  the  parties  as  to  the  exact  terms  of  the  promise, 
the  courts  can  see  that  justice  is  done  by  charging  against  the 
promisor  the  reasonable  value  of  that  in  respect  to  which  the 
promise  was  made,  while  in  the  other  case,  and  when  a  third 
party  is  the  real  debtor,  and  the  party  alone  receiving  benefit,  it 
is  impossible  to  solve  the  conflict  of  memory  or  testimony  in  any 
manner  certain  to  accomplish  justice.  There  is  also  a  temptation 
for  a  promisee,  in  a  case  where  the  real  debtor  has  proved  insolv- 
ent or  unable  to  pay,  to  enlarge  the  scope  of  the  promise,  or  to 
torture  mere  words  of  encouragement  and  confidence  into  an 
absolute  promise:  and  it  is  so  obviously  just  that  a  promisor  re- 
ceiving no  benefits  should  be  bound  only  by  the  exact  temis  of 
the  promise,  that  this  statute  requiring  a  memorandum  in  writing 
was  enacted.  Therefore,  whenever  the  alleged  promisor  is  an 
absolute  stranger  to  the  transaction,  and  without   interest  in   it, 


146  GUARAXTY  AND   5URi:TVSinP. 

courts  strictly  uphold  the  ohligations  of  this  statute.  But  cases 
sometimes  arise  in  whicli,  though  a  third  party  is  die  original 
obligor,  the  primary  debtor,  tlie  promisor  has  a  personal,  imme'- 
diate  and  pecuniary  interest  in  the  transaction,  and  is  therefore 
himself  a  party  to  be  benejited  by  the  performance  of  the  prom- 
isee. In  such  cases  the  reason  which  underlies  and  which 
prompted  this  statutory  provision  fails,  and  the  courts  will  give 
effect  to  the  promise.  As  said  by  this  court  in  Eiiicrson  v.  Slater, 
22  How.  2^,  43:  "Whenever  the  main  purpose  and  ()l)ject  of  the 
promisor  is  not  to  answer  for  another,  l)ul  to  sul)serve  some 
pecuniary  or  business  purpose  of  his  own.  inxolving  either  a  bene- 
fit to  liimself  or  damage  to  the  other  ctjntracting  party,  his 
promise  is  not  within  the  statute,  although  it  may  be  in  form  a 
promise  to  pay  the  delit  of  another,  and  although  the  perfonnance 
of  it  ma}-  incidentally  have  the  eft'ect  of  extinguishing  that  lia- 
bilit}-."  To  this  may  be  added  the  observation  of  Browne,  in  his 
work  on  the  Statute  of  Frauds,  Sec.  165  :  "The  statute  contem- 
plates the  mere  promise  of  one  man  to  be  responsible  for  another, 
and  cannot  be  interposed  as  a  cover  and  shield  against  the  actual 
obligations  of  the  defendant  himself."  The  thought  is,  that  there 
is  a  marked  difference  between  a  promise  which,  without  any  inter- 
est in  the  subject  matter  of  the  prc^mise  in  the  promisor,  is  purely 
collateral  to  the  obligation  of  a  third  party,  and  that  which,  though 
operating  upon  the  debt  of  a  third  party,  is  also  and  mainly  for 
the  l)enefit  of  the  promisor.  The  case  before  us  is  in  the  latter 
category.  While  the  original  promisor  was  the  mining  company, 
and  the  undertaking  was  for  its  benefit,  yet  the  performance  of 
the  contract  inured  equally  to  the  benefit  of  Davis  and  the  mining 
company,  i'erformance  helped  die  mining  company  in  the  pay- 
ment of  its  debt  to  Davis,  and  at  the  same  time  helped  Davis  to 
secure  the  payment  of  the  mining  company's  debt  to  him;  and  as 
the  nn'ning  com])an\-  was  ai)])arently  destitute  of  any  other  ])ro])- 
crty,  and  the  payment  of  its  debt  to  Davis  therefore  dependent 
upon  the  continual  and  successful  working  of  this  mine ;  and  as  the 
control  and  working  of  the  mine  had  been  put  in  the  hands  of 
Davis  so  that  he  might  justly  say,  as  he  did:  "1  am  i)ractically 
the  owner,"  it  follows  that  he  was  a  real,  substantial  party  in  inter- 
est in  the  performance  of  this  contract.  His  promise  was  not  one 
ptirely  collateral  to  sustain  the  obligations  of  the  mining  company, 
but  sul)stantially  a  direct  and  personal  one  to  advance  his  own 
in'crests.     \\'liile  the  mining  company  was  ultimately  to  be  bene- 


DAVIS  VS.   PATRICK.  147 

filed,  Davis  was  primarily  to  be  benefited  by  the  transportation  of 
ihe  ore,  for  thereby  that  debt,  which  otherwise  could  not,  would 
be  paid  to  him.  He,  therefore,  in  any  true  sense  of  the  term,  occu- 
P'ed  not  the  position  of  a  collateral  undertaker,  but  that  of  an  orig- 
hvJi  promisor,  and  it  would  be  a  shadow  on  justice  if  the  admin- 
istration of  the  law  relieved  him  from  the  burden  of  his  promise 
on  the  ground  that  it  also  resulted  to  the  benefit  of  the  mining 
company,  his  debtor. 

Counsel  for  Davis  placed  .stress  on  the  form  of  expression 
attributed  by  Patrick  to  Davis,  to-wit :  "I  will  be  personally  respon- 
sible ;  I  will  see  you  paid ;"  and  contends  that  the  import  of  such 
language  is  that  of  a  collateral  promise.  There  is  force  in  this 
contention,  as  it  implies  that  someone  else  was  also  bound,  but  the 
real  character  of  a  promise  does  not  depend  altogether  upon  the 
form  of  expression,  but  largely  on  the  situation  of  the  parties ; 
and  the  question  always  is,  what  the  parties  mutually  understood  by 
the  language,  whether  they  understood  it  to  be  a  collateral  or  a 
direct  promise.  Patrick  declares  he  understood  it  to  be  a  direct 
promise,  and  acted  on  the  faith  of  it.  That  Davis  understood  it 
in  the  same  way,  is  evidenced  not  only  from  the  circumstances  sui- 
rounding  the  parties  at  the  time,  but  from  the  fact  that  in  a  sub- 
sequent interview,  when  charged  to  have  always  promised  to  pay 
this  debt,  he  admits  that  he  believes  that  he  did.  The  plaintiff,  be- 
lieving that  Davis  was,  as  he  said,  practically  the  owner,  the  party 
primarily  to  be  benefited  by  the  conversion  of  the  products  of  the 
mine  into  money,  understood  that  Davis  was  making  an  original 
promise  to  pay  for  the  work  which  he  might  do,  and  upon  such 
promise-  he  might  surely  rely  as  an  original  promise,  at  least  for 
any  work  done  thereafter. 

The  merits  of  the  case,  therefore,  as  disclosed  by  the  testi- 
mony, were  with  Patrick,  and  the  judgment  in  his  favor  was  right. 
It  is  objected  that  the  court  in  its  instructions  spoke  of  Davis  as 
an  original  promisor,  as  one  promising  to  pay  the  debt,  and  not 
as  one  promising  to  be  responsible  for  the  debt,  or  to  see  it  paid. 
But  as  Davis,  in  the  second  conversation,  promised  to  pay,  and  in 
the  third  admitted  that  he  had  always  promised  to  pay  the  debt, 
we  cannot  think  that  the  court  misinterpreted  the  scope  and  effect 
of  his  words.  It  is  not  probable  that  the  parties  to  this  transaction 
understood  the  difference  between  an  original  and  a  collateral 
promise.  We  must  interpret  Davis's  promise  in  the  light  of  the 
surroundings  and  of  his  subsequent  admissions,  and  in  that  light 


148  GUARANTY   AND   SUKliTVSli  IP. 

we  caniidt  think  llial  tin.'  cuurl  wwd  in  its  ci  insirucliou  thereof; 
and  if  the  jury  beheved  that  he  had  made  such  promises,  we  can- 
not doubt  that  the  verchct  should  have  Ijeen  as  it  was. 

Jt  is  also  objected  that  the  court  erred  in  not  directing-  a  ver- 
dict for  defendant  ujion  the  ground  of  a  departure  from  the  allega- 
tions of  the  petition.  I'liat  counts  on  an  orii;inal  employment  by 
Davis,  in  1873,  while  the  testimony  shows  that  the  original  employ- 
ment was  by  the  mining  company,  and  that  the  ])romise  of  Davis 
was  made  in  tlie  fall  of  1874.  and  after  Patrick  liad  been  at  work 
for  months  for  the  mining  company.  .\s  no  oljjection  was  made 
to  the  admission  of  testimony  on  this  ground,  and  as  an  amend- 
ment of  the  petition  to  correspond  with  the  proof  would  involve 
but  a  trilling  change,  we  cannot  see  that  there  was  any  error  in 
the  ruling  of  tlie  court.  If  ol^jection  had  been  made  in  tlu'  tirst 
instance,  doubtless  the  court  would,  as  it  ought  to  have  done,  have 
permitted  an  amendment  of  the  ])etition.  There  was  no  surprise, 
for  the  facts  were  fully  developerl  in  tlie  former  trial. 

Tpon  the  record  as  presented.  \\i'  think  that  the  verdict  and 
judgment  were  right,  and  as  no  substantial  error  ai)])ears  in  the 
proceedings  the  judgment  is 

Affirmed. 

The  CiiiKF  Ji'STiCK,  Mr.  Justice  I'.k  \l)l.l■:^■  ami  .\lr.  Justice 
Gray  did  not  hear  the  argument  nor  take  i)art  in  the  decision  of 
this  case. 


Hooker  ct  <//.,  Respondents,  r'.s-.  ivfS.siCLi.,  Appellant   (  1886). 
67  Wis.  257;  30  X.  W.  358. 

Ap])eal  from  the  Gonnty  Cotui  of  bond  du  1  .ac  County. 

SuthcrUmd  &  Sutherland,  for  a])i)ellant. 

/{/;  Hooker  and  (".  /:.  Hooker,  for  respondents. 

The  facts  will  sufficiently  appear  from  die  opinion. 

Orton,  J.  In  1883  the  village  board  of  the  village  of  I'.ran- 
don.  in  b'ond  du  Lac  county,  determined  diat  no  license  for  the  sale 
of  intoxicating  licpiors   in    said   village   .shonld  be   granted   during" 


HOOKER   VS.    RUSSELL.  149 

the  ensuing"  year,  and  passed  an  ordinance  prohiliiting  such  sale 
and  providing-  for  the  punishment  of  tliose  who  should  violate  the 
same.  Certain  persons  continued  to  sell  intoxicating"  liquors  in 
said  village  notwithstanding,  and  in  violation  of  said  ordinance, 
and  in  July,  1883,  said  village  board,  by  resolution,  employed  the 
said  plaintilTs  and  respondents  to  act  as  tlie  attorneys  of  the  village 
in  the  prosecution  of  such  offenders,  llie  respondents,  as  such 
attorneys  of  the  village,  commenced  several  prosecutions  under 
such  employment,  and  rendered  therein  legal  services,  amounting 
in  value  to  $173.66,  up  to  and  including  September  7,  1883.  when 
on  that  day  an  injunction  was  served  upon  said  village,  at  the  suit 
of  one  David  Whitton,  a  taxpayer  of  said  village,  restraining  the 
village  board  from  appropriating  or  paying  out  of  the  treasury 
any  money  for  the  payment  of  attorneys'  fees  in  the  prosecution 
of  criminal  actions  theretofore  or  thereafter  had  for  the  violation 
of  the  excise  laws  of  the  state,  and  from  appropriating  or  paying 
any  money  for  expenses  incurred  in  such  prosecutions.  Notwith- 
standing said  injunction,  the  respondents  continued  to  render  legal 
services  for  said  village  in  such  prosecutions  up  to  and  including 
the  26th  day  of  January,  1884,  the  value  of  which  then  was  the 
sum  of  $657.34,  including  the  above  amount  of  $173.66.  The  bill 
for  these  services  was  presented  to  and  filed  with  the  village  board 
as  a  claim  against  the  village,  and  the  respondents  brought  suit 
against  the  village  therefor,  which  suit  is  still  pending. 

The  seventh  finding  of  fact,  which  must  be  received  as  a  verity 
in  the  case  as  neither  party  lias  excepted  thereto,  is  as  follows : 
"That  on  or  about  the  8th  day  of  September,  1883,  and  subsequent 
to  the  service  of  such  injunctional  order  upon  said  village,  the 
defendant,  George  A.  Russell,  requested  the  plaintiff  to  continue 
said  prosecutions  notwithstanding  said  injunction,  and  promised 
and  agreed  to  pay  them  for  their  past  and  future  services  therein 
in  case  of  their  inability  to  collect  their  claim  therefor  from  said 
village."  It  was  on  this  promise  that  this  suit  was  brought  against 
the  appellant,  and  on  which  the  respondents  recovered  in  the  county 
court.  There  can  be  no  question  but  that  this  special  promise  of  the 
appellant,  not  in  writing,  to  answer  for  the  debt  of  the  village  of 
Brandon,  is  void  by  the  statute  of  frauds  (R.  S.  sec.  2307,  subd.  2). 
The  services  of  the  respondents  were  rendered  for  the  village,  and 
under  a  contract  with  the  village.  They  have  presented  their 
claim  to,  as  being  against,  the  village,  and  have  sued  the  village 
as  being  liable  therefor.     "So  long  as  the  oiiginal  debt  remains 


150  GIJARAXTV   AND   SURETYSHIP. 

payable  by  the  debtor  to  his  creditor,  any  arrangement  whatever 
by  which  another  party  promises  to  pay  that  debt  is  within  the 
very  letter  of  the  statute,  no  matter  from  what  souce  the  considera- 
tion of  the  latter  promise  is  derived."  Eincrick  v.  Sanders,  i  Wis. 
yy ;  Cotter  ill  v.  Stevens,  lo  Wis.  422  ;  Cook  v.  Barrett,  15  Wis.  596. 

Against  the  operation  of  the  statute  upon  this  promise  it  is 
claimed  (i)  that  it  has  been  judicially  determined,  in  the  injunc- 
tion suit  against  the  village,  that  the  village  is  not  liable  for  such 
services.  Jt  is  sufficiently  answered  thai  neither  of  these  partTes 
was  a  party  to  that  suit,  and  therefore  not  bound  by  the  judgment 
therein.  But,  again,  it  was  a  suit  in  equity,  and  there  might  have 
been  other  reasons  for  the  injunction  than  that  the  village  was 
not  legally  liable  on  the  contract  to  pay  their  attorneys  for  their 
services  in  the  prosecutions.  (2)  It  is  claimed  that  for  future 
services  of  the  respondents  the  credit  was  given  to  the  appellant. 
All  the  services  were  performed  under  one  contract  with  the  vil- 
lage. It  is  so  alleged  in  the  complaint,  and  the  respondents  not 
only  so  testify,  but  they  have  preferred  their  claim  against  the 
village,  and  brought  suit  against  the  village  for  it.  The  village 
has  never  been  released  from  any  part  of  it.  (3)  It  is  claimed 
that  the  appellant  originally  promised  to  pay  for  such  future  serv- 
ices on  a  new  considerati'on  of  benefit  or  advantage  to  himself  as  a 
citizen  and  officer  of  the  village,  having  an  interest  in  enforcing 
the  laws  against  the  sale  of  intoxicating  liquors.  His  zeal  in  the 
cause  of  temperance,  and  his  interest  m  enforcing  the  laws  in 
common  with  all  other  citizens,  would  scarcely  be  a  good  or  valu- 
able consideration  for  a  promise  to  pay.  But  the  above  finding  is 
sufficient  to  show  that  the  same  promise  embraced  the  payment 
for  die  past  and  future  services  alike. 

We  shall  not  decide  in  this  case  whether  the  village  of  Bran- 
don is  liable  to  the  respondents  on  its  contract,  although  the  county 
court  found,  as  a  conclusion  of  law,  that  the  village  was  not  liable 
and  had  no  authority  to  make  the  contract.  The  village  is  not  a 
party  to  this  suit,  and  has  not  denied  its  liability  in  this  suit.  The 
village  is  presumptively  liable,  for  it  has  the  capacity  to  contract. 
It  will  be  in  time  to  decide  the  question  of  the  liability  of  the 
village  on  this  particular  contract  when  the  action  of  the  respond- 
ents against  the  village  to  enforce  it  is  on  trial. 

Are  the  respondents  bound  by  the  finding  in  this  case  that 
the  village  is  not  liable?  It  can  only  be  determined  whether  the 
respondents  are  able  to  collect  their  claim  against  the  village,  when 


SUTTON  VS.   GREY. 


151 


their  suit  for  that  purpose,  now  pending,  shall  be  tried.  In  any 
view  that  can  be  properly  taken  of  this  promise,  it  is  a  collateral 
one  and  void. 

By  the  Court. — The  judgment  of  the  county  court  is  reversed, 
and  the  cause  remanded  for  a  new  trial. 


Sutton  Sz  Co.  rs.  Hrev   (1893). 
I  O.  B.  Div.  (T894),  2Ss. 

Appeal  by  the  defendant  against  the  judgment  of  Bowen, 
L.  J.,  at  the  trial  of  the  action  without  a  jury. 

The  plaintiffs  were  stockbrokers  and  members  of  the  London 
Stock  Exchange.  The  defendant  was  not  a  member  of  the  Stock 
Exchange.  The  plaintiffs  had,  as  they  alleged  in  their  statement 
of  claim,  in  January,  1891,  entered  into  an  oral  agreement  with  the 
defendant  that  he  should  introduce  clients  to  them,  and  that  they 
should  transact  business  on  the  Stock  Exchange  for  the  clients 
thus  introduced,  upon  the  terms,  as  between  the  plaintiff's  and  the 
defendants,  that  he  should  receive  one-half  the  commission  earned 
by  the  plaintiff's  in  respect  of  any  transactions  by  them  for  and  on 
behalf  of  such  clients  as  were  introduced  by  the  defendant,  and 
that  the  defendant  should  pay  to  the  plaintiff  one-half  of  any  loss 
which  might  be  incurred  by  the  plaintiffs  in  respect  of  those  tran- 
sactions. 

The  plaintiffs  claimed  from  the  defendant  half  the  loss  which 
thev  had  incurred  in  Stock  Exchange  transactions  which  they  had 
entered  into  on  behalf  of  a  client  named  Robertson,  who  had  been 
introduced  to  them  by  the  defendant  in  pursuance  of  the  oral 
agreement. 

By  his  statement  of  defence,  the  defendant  pleaded  that  Sec. 
4  of  the  Statute  of  Frauds  had  not  been  complied  with;  that  the 
contract  alleged  by  the  plaintiff's  was,  within  the  meaning  of  Sec. 
4  of  the  Statute  of  Frauds  (29  Car.  2,  c.  3),  "a  special  promise  to 
answer  for  the  debt  of  another  person"  ;  and  that,  consequently, 
as  it  was  not  in  writing,  an  action  upon  it  could  not  be  maintained. 

Stcz'cusoii,  for  defendant. 

Rufiis  Isaacs,  for  the  plaintiffs,  was  not  called  upon. 


15:2  GUARAXTY  AND  SURETYSHIP. 

T.ORi>  EsiiKR,  M.  \\.  in  iiiv  ()i)ini()n  this  appeal  should  lie 
dismissed.  I  think  thai  the  iuds^mcnt  of  lUnviLX,  L.  J.,  was  in 
every  respect  rig^ht.  1  do  not  think  that  the  relation  between  the 
l)laintiffs  and  the  defendant  was  that  cjf  partnership.  They  had 
no  intention  to  become  partners,  and.  as  the  law  now  stands,  a  part- 
nershi])  can  not  be  constituted  without  such  an  intention.  In  my 
opinion  the  true  relation  between  the  plaintiiTs  and  the  defendant 
was  this:  The  plaintiffs  being-  brokers  u])on  the  Stock  Exchan.oe, 
of  which  the  defendant  was  nttt  a  member,  they  agreed  together 
that  the  plaintiffs  should  carry  out  transactions  upon  the  Stock 
Exchange  for  the  nuilual  benetit  of  themselves  and  the  defendant. 
The  defendant  could  not  himself  transact  business  upon  the  Stock 
Exchange,  and  the  plaintiffs  made  this  agreement  with  him:  "If 
you  will  find  persons  who  wish  to  operate  upon  the  Stock  Exchange 
and  will  introduce  them  to  us  as  clients,  we  will,  on  benalf  of  the 
persons  whom  you  tluis  introduce  to  us,  transact  the  ordinary 
business  of  a  broker  on  the  Stock  Exchange,  and  make  ourselves 
personallv  resi^onsible  according  to  its  rules  on  these  terms — that 
our  brokers'  commission  on  the  Stock  Exchange  shall  be  divided 
between  us  and  you,  just  as  if  you  \\ere  (ur  partner  and  a  member 
of  the  Stock  Exchange,  and  th.at,  if  tliere  slu.uld  be  a  loss  in 
respect  of  the  transactions,  you  shall  indemnify  us  against  half  the 
loss."  The  defendant  verbally  agreed  to  diis,  but  there  was  not 
any  contract  or  memorandum  in  writing.  The  contract,  in  my 
opinion,  is  one  which  regulated  the  part  which  the  defendant  was 
to  take  in  the  transactions  which  were  contemjilated,  and,  if  he 
was  to  be  an  agent  for  the  plaintiffs,  the  contract  regulated  the 
terms  of  his  agenc}.  Again,  before  the  transactions  were  entered 
into,  the  terms  were  regulated  by  the  agreement,  and  they  were 
such  as  to  give  the  defendant  an  interest  in  the  transactions.  The 
transactions  were  to  be  entered  into  ])y  the  plaintiffs  partly  for 
their  own  beneht  anc'  partly  for  the  benefit  of  the  defendant.  Is 
such  a  contract  a  simple  contract  of  guarantee — "a  special  promise 
to  answer  for  the  debt  or  default  of  another  person'' — so  as  to 
bring  the  case  within  Sec.  4  of  the  Statute  of  Erauds,  or  is  it  a 
contract  of  indemnity?"  Whether  any  contract  is  the  one  or  the 
other  is  often  a  verv  nice  ([uesti(.n.  i.ut  certain  tests  have  been 
laid  down  to  guide  the  C.Vnu-t  in  determining  under  which  head 
anv  ])articular  contract  coiucs.  The  i^rincipal  case  in  English  law 
which  affords  such  a  guide  is  Courtier  v.  Ilasiic,  8  Ex.  40.  In 
that  case  a  test  vais  given  bv  Pakki:,   P..,  who  delivered  the  ju<lg- 


SUTTOX   VS.   GREY.  153 

;ment  of  himself  and  Ai.derson,  ]\.  (from  whom  Pollock,  C.  [>., 
differed  as  to  the  construction  of  the  contract).  The  learned 
Judge  said  (at  p.  55):  The  other  and  only  remaining  point  is. 
whether  the  defendants  are  responsible  1)}  reason  of  their  charging 
a  del  credere  commission,  though  they  have  not  guaranteed  by 
writing  signed  l)y  themselves.  We  think  they  are.  Doubtless  if 
they  had  for  a  percentage  guaranteed  the  debt  owing,  or  per- 
formance of  the  contract  by  the  vendee,  being  totally  unconnected 
widi  the  sale"  ( I  would  read  that  "totally  unconnected  with  the 
transaction"),  "they  would  not  be  liable  without  a  note  in  writing 
signed  by  them ;  but,  being  the  agents  to  negotiate  the  sale"  ( that 
is,  as  I  read  it,  "being  connected  with  the  transaction"),  "the  com- 
mission is  paid  in  respect  of  that  employment;  a  higher  reward  is 
paid  in  consideration  of  their  taking  greater  care  in  sales  to  their 
customers,  and  precludmg  all  questions  whether  the  loss  arose 
from  negligence  or  not  and  also  for  assuming  a  greater  share  of 
responsibility  than  ordinary  agents,  namely,  responsibility  for  the 
solvency  and  performance  of  their  contracts  by  their  vendees.  This 
is  the  main  object  of  the  reward  being  given  to  them ;  and,  though 
it  may  terminate  in  a  liability  to  pay  the  debt  of  another,  that  is 
not  the  immediate  object  for  which  the  consideration  is  given." 
There  the  test  given  is,  whether  the  defendant  is  interested  in  the 
transaction,  either  by  being  the  person  '\\-ho  is  to  negotiate  it  or  in 
some  other  way,  or  whether  he  is  totally  unconnected  with  it.  If 
he  is  totally  unconnected  with  it,  except  by  means  of  his  promise 
to  pay  the  loss,  the  contract  is  a  guarantee ;  if  he  is  not  totally  un- 
connected with  the  transaction,  but  is  to  derive  some  beneiit  from 
it,  the  contract  is  one  of  indemnity,  not  a  guarantee,  and  Sec.  4 
does  not  apply.  The  rule  thus  laid  down  has  been  adopted  as  a 
test  in  subsequent  cases.  In  Fitzgerald  v.  Dressier,  7  C.  B. 
(N.  S.)  374,  CocKBURX,  C.  J.,  said  (at  p.  392)  :  "The  law  upon 
this  subject  is,  I  think,  correctly  stated  in  the  notes  to  Forth  v. 
Stanton,  i  Wms.  Saund.  21  le.  where  the  learned  editor  thus  sums 
up  the  result  of  the  authorities :  'There  is  considerable  difficulty  in 
the  subject,  occasioned  perhaps  by  unguarded  expressions  in  the 
reports  of  the  different  cases ;  but  the  fair  result  seems  to  be  that 
the  question  whether  each  particular  case  comes  within  this  clause 
of  the  statute  (  Sec.  4)  or  not  depends,  not  on  the  consideration  for 
the  promise,  but  on  the  fact  of  the  original  party  remaining  liable, 
coupled  with  th-e  absence  of  any  liability  on  the  part  of  the  defend- 
ant or  his  property,  except  such  as  arises  from  his  express  prom- 


154  GUARANTY  AND   SURETYSHIP. 

ise.'  I  quite  concur  in  tliat  view  of  the  doctrine,  provided  the 
proposition  is  considered  as  emhracing  tne  quaUlkation  at  the 
conclusion  of  the  passage ;  for,  though  i  agree  that  the  considera- 
tion alone  is  not  the  test,  but  that  the  party  taking  upon  himself 
the  obligation  upon  which  the  action  is  brought  makes  himself 
responsible  for  the  del)t,  or  default  of  another,  still  it  must  be^ 
taken  with  the  qualification  stated  in  the  note  above  cited,  viz., 
an  absence  of  prior  liabilit\  on  the  part  of  the  defendant  or  his 
property,  it  being,  as  I  think,  truly  stated  there  as  the  result  of  the 
authorities,  that  if  there  be  something  more  than  a  mere  under- 
taking to  pay  the  del)t  of  anotlu-r,  as,  where  the  property  in  con- 
sideration of  the  giving  u])  of  which  the  party  enters  into  the  un- 
dertaking is  in  point  of  fact  his  own,  or  is  property  in  which  he 
has  some  interest,  the  case  is  not  within  the  provision  of  the  stat- 
ute, which  w^as  intended  to  apply  to  the  case  of  an  undertaking 
to  answer  for  the  del)t,  tlefault,  or  miscarriage  of  another,  where 
the  person  making  the  promise  has  himself  no  interest  in  the 
property  which  is  the  subject  of  the  undertaking.  I,  therefore, 
agree  with  my  learned  brothers  that  this  case  is  not  within  the 
Statute  of  Frauds."  The  learned  Judge  there  used  the  words, 
"has  himself  no  interest  in  the  property  which  is  the  subject  of 
the  undertaking-,"  because  he  was  dealing  with  a  case  of  property ; 
but  if  his  words  be  read,  as  1  think  they  should  be,  "has  no  inter- 
est in  the  transaction,"  he  is  adopting  that  interpretation  of 
Couturier  v.  Hastie,  8  Ex.  40,  which  I  think  is  the  right  one.  Then 
again,  in  fleet  v.  Miirton  (Law  Rep.  7  Q.  B.  at  p.  133),  Black- 
burn, J.,  quotes  the  passage  which  I  have  read  from  the  judgment 
of  Parki:,  B.,  in  Couturier  v.  Hastie  (8  Ex.  40).  and  thus  inter- 
prets it:  "He  says  that  it  is  neither  a  guaranteeing  nor  a  contract 
for  sale,  and  that  consequently  the  Statute  of  Frauds  is  out  of  the 
question.  It  seems  to  me,  therefore,  as  Mr.  Cohen  said,  that  this 
custom  must  be  taken  as  merely  regulating  the  terms  of  the  em- 
ployment." If  in  the  present  case  the  agreement  is  taken  as  regu- 
lating the  terms  of  the  defendant's  employment,  it  is  not  wathin 
Sec.  4  of  the  statute;  on  the  other  hand,  if  the  transaction 
is  looked  at  as  entered  into  partly  for  the  benefit  of  the  ])laint- 
iffs  and  partly  for  the  benefit  of  the  defendant,  it  comes  within 
the  rule  laid  down  by  Parkin  B.,  in  Couturier  v.  Hastie,  and 
adopted  by  Cockburn,  C.  J.,  in  Fitagerald  v.  Dressier.  The 
contract  is  not  a  guarantee  with  regard  to  a  matter  in  which  the 
defendant  has  no  interest  except  by  virtue  of  the  guarantee ;  it  is^ 


SUTTON    VS.    GRKV.  155 

an  indemnity  with  regard  to  a  transaction  in  which  the  defendant 
has  an  interest  equally  with  the  plaintiffs.  In  my  opinion,  Bowen, 
L.  J.,  was  right  in  holding  that  the  agreement  is  not  within  the 
statute,  and  his  decision  ought  to  be  affirmed. 

Lopes,  L.  J.  I  am  of  the  same  opinion.  Bowen,  L.  J.,  has 
adopted  the  view  of  the  plaintiffs,  that  the  contract  was  one  of 
indemnity,  and  I  think  he  was  right  in  so  holding.  The  defend- 
ant says  that  the  contract  amounts  to  "a  special  promise  to  answer 
for  the  debt  or  default  of  another  person,"  and  is  therefore  within 
the  statute.  The  true  test,  as  derived  from  the  cases,  is,  as  the 
master  of  the  Rolls  has  already  said,  to  see  whether  the  person 
who  makes  the  promise  is,  but  for  the  liability  which  attaches  to 
him  by  reason  of  the  promise,  totally  unconnected  with  the  tran- 
saction, or  whether  he  has  an  interest  in  it  independently  of  the 
promise.  In  the  fomier  case,  the  agreement  is  within  the  statute ; 
in  the  latter,  it  is  not.  In  the  present  case,  it  appears  to  me  be- 
yond all  question  that  the  defendant  liad  an  independent  interest 
in  the  transaction,  because  it  was  entered  into  for  the  mutual 
benefit  of  the  plaintiff's  and  himself.  In  another  view,  the  contract 
was  to  regulate  the  terms  of  the  defendant's  employment  by  the 
plaintiffs.  In  my  opinion,  the  decision  of  Bowen,  L.  J.,  was  right, 
and  the  appeal  must  be  dismissed. 

Kay,  L.  J.  According  to  the  report  which  I  have  of  the  judg- 
ment of  Bowen,  L.  J.,  he  said,  'M  have  come  to  the  conclusion  that 
the  plaintiffs  are  correct  in  saying  that  it  was  arranged  between 
them  and  the  defendant  that  he  should  contribute  to  any  loss  that 
might  occur  to  them  upon  Robertson's  transactions."  I  agree  that 
this  arrangement  hardly  comes  up  to  a  partnership,  though  it  is 
verv  near  it.  The  commission  received  in  respect  of  any  transaction 
might  not  be  all  clear  profit ;  the  expenses  of  th.e  office  establish- 
ment would  have  to  be  provided  for;  and  therefore  the  contract 
with  the  defendant  was  not  that  he  should  share  the  profit  what- 
ever it  might  be.  On  the  whole  I  think  it  would  be  going  too  far 
to  say  that  the  contract  was  that  the  defendant  sliould  share  in  the 
profits  and  losses  of  the  transactions.  But  then  comes  in  the  prin- 
ciple of  the  decision,  that  a  contract  to  employ  a  del  credere  agent  is 
not  within  the  statute  and  need  not  be  in  writing,  because  its  main 
object  is  to  regulate  the  terms  of  the  agent's  employment,  and, 
though  in  the  result  the  agent  may  have  to  indemnify  the  prin- 
cipal against  losses,  that  is  not  the  main  object  of  the  contract. 
The  present  case,  however,  is  not  strictly  that  of  a  del  credere 


156  Gl^XRAXTV   AXD   SURETYSHIP. 

ai^viit,  and  tlu'  (lucstion  is,  wIu'iIkt  tin-  exception  from  the  statute 
which  has  l)ecn  eslahhshicd  ni  the  case  i)f  a  del  crcdcrc  aj;'ent  ap- 
plies to  the  i)resent  case.  1  can  not  see  any  difficuUy  in  holding 
that  it  does,  when  1  look  at  the  reasons  given  hy  Pauki:,  T.  ,  for 
the  decision  in  Couturier  v.  Hostie  (8  Ex.  40),  when  a  man  simply 
agrees  to  assume  liahility  for  tlie  debt  of  another,  he  has  no  inter- 
est whatever  in  the  transaction,  except  hy  virtue  of  the  guarantee. 
In  the  present  case  the  defendant  l;as  an  independent  interest 
in  the  transactions.  Another  distinction  is  this,  that  the  contract 
is  one  which  regulated  the  terms  upon  wdiich  the  defendant  was 
tQ)  he  employed  by  the  plaintiffs.  I  agree  with  Uowkn,  L.  J.,  that 
"this  is  really  a  contract  which  regulates  the  terms  of  the  agency, 
and  the  defendant's  liahility  to  answer  U>r  the  debt  of  another  is 
onlv  an  ulterior  consequence  of  the  terms  in  which  the  contract  is 
framed.'"     I  agree  that  the  appeal  must  be  dismissed. 

.Appeal  dismissed. 

Solicitors:  Harold  .1.  Fariiian, 

Hid  red  &  Bignold. 


The  First  Xatioxal  LJaxk,  Respondent,  vs.  Ciialmkrs  et  al., 

Appellants  ( 1895). 

144  N.  Y.  432:  39  N.  E.  331. 

Appeal  from  judgment  of  the  (General  Term  of  the  Supreme 
Court  in  the  Second  Judicial  Department,  entered  upon  an  order 
made  at  the  May  Term,  1893,  which  affirmed  a  judgment  in  favor 
of  the  plaintiff,  entered  upon  a  decision  of  the  Court  on  trial  at 
Circuit  without  a  jury. 

A  //;('///.  of  the  case  on  a  former  ajipeal  appears  in  120  N.  Y. 
658. 

This  action  was  brought  upon  an  alleged  agreement  made  by 
defendants  for  a  valuable  consideration,  to  pay  to  plaintiff  the 
amount  of  an  indebtedness  of  the  firm  of  Charles  Sjiruce  &  Co. 
to  it. 

On  October  30,  1882,  said  firm,  being  financially  eml)arrassed, 
confessed  judgment  to  defendants  for  various  sums  due  them  and 
for  amounts  owing  to  other  parties.     The  statement  on  which  the 


FIRST    NATIONAL     BANK    VS.    CHALMERS.  157 

judgment  was  entered,  under  tlie  head  of  "Liabilities  assumed," 
set  forth,  among-  other  items,  the  following:  "Money  due  by 
Charles  Spruce  &  Co.  to  First  Xational  Bank  of  Sing  Sing  on 
overdraw  account,  $1556.47." 

The  court  found  that  defendant  made  an  absolute,  uncondi- 
tional promise  to  pay  plaintiff's  debt. 

Further  facts  are  stated  in  the  opinion. 

Calvin  Frost,  for  appellants. 
Francis  Larkin,  for  respondent. 

Finch,  J.  What  constitutes  an  original  promise,  upon  which 
the  Statute  of  Frauds  does  not  operate,  and  which  therefore  may 
be  valid  and  effectual  without  a  writing,  is  fairly  settled  in  one 
direction  at  least.  Wherever  the  facts  show  that  the  debtor  has 
transferred  or  delivered  to  the  promisor,  for  his  own  use  and  ben- 
efit, mone}-  or  property  in  consideration  of  the  latter's  agreement 
to  assume  and  pay  the  outstanding  debt,  and  he,  thereupon,  has 
promised  the  creditor  to  pay,  that  promise  is  original,  upon  the 
ground  that  by  the  acceptance  of  the  fund  or  property  under  an 
agreement  to  assume  and  pay  the  debt  the  promisor  has  made  that 
debt  his  own,  has  become  primarily  liable  for  its  discharge,  and  has 
assumed  an  independent  duty  of  payment  irrespective  of  the  liabil- 
ity of  the  principal  debtor.  Acklcy  v.  Fariiicntcr,  98  X.  Y.  425  ; 
White  V.  Rintonl,  108  id.  223.  In  such  a  case  the  debt  has  become 
that  of  the  new  party  promising ;  his  promise  is  not  to  pay  the  debt 
of  another,  but  his  own ;  as  between  him  and  the  primary  del:)tor 
the  latter  has  become  practically  a  surety  entitled  to  require  the 
payment  to  be  made  by  his  transferee.  The  consideration  of  the 
primary  debt,  by  the  transfer  of  the  money  or  property  into  which 
that  consideration  had  been  in  effect  merged,  may  be  said  to  have 
been  shifted  over  to  the  new  promisor,  who  thereby  comes  under  a 
duty  of  payment  as  obvious  as  if  original  consideration  had  passed 
directly  to  him. 

The  question  before  us  therefore  is  whether  the  promise  of 
the  defendants,  made  to  the  bank,  to  pay  the  debt  due  it  from  Leary 
&  Spruce,  was  founded  upon  sucli  a  transfer  of  property  as  I  have 
above  described,  and  thus  was  original,  or  whether  it  was  not  so 
founded,  and  must  be  for  that  reason  deemed  collateral. 

We  are  bound  to  assume  upon  the  findings  that  the  promise 
to  pay  was  absolute,  and  clean  of  condition  or  contingency.     The 


158  GUARANTY  AND   SURETYSHIP. 

question  whether  it  was  made  at  all  was  severely  litigated,  and 
depended  upon  the  conclusion  to  be  drawn  from  testimony  full  of 
violent  contradictions,  and  we  are  not  at  liberty  to  review  the  deter- 
mination of  fact  which  affirms  that  the  promise  to  pay  was  in  truth 
made,  and  was  absolute  in  its  terms  as  sworn  to  by  the  witnesses 
on  the  part  of  the  plaintiff.  As  to  the  substance  of  the  agreement 
between  the  defendants  and  the  primary  debtors,  there  is  also  con- 
tradiction. The  former  assert  that  their  assumption  of  the  debt 
went  no  further  than  a  consent  to  pay  it  out  of  the  proceeds  of  the 
debtor's  property  after  the  discharge  of  their  own  debt,  or  in  other 
words,  that  their  agreed  liability  was  to  pay  plaintiff  only  out 
of  proceeds  when  realized,  and  even  then  out  of  any  possible  excess 
remaining  over  and  above  their  own  debt.  If  that  is  true,  they 
were  under  no  present  duty  to  pay  the  bank  when  the  promise  was 
made ;  the  debt  had  not  become  theirs ;  might  never  become  theirs ; 
and  so  their  verbal  promise  to  the  bank  was  purely  collateral  and 
to  answer  for  the  debt  of  another.  That  proposition  was  ([uite 
distinctly  held  in  Ackley  v.  Parmcntcr,  supra,  and  upon  the  author- 
ity of  Belknap  v.  Bender,  75  X.  Y.  446.  which  disclosed  an  agree- 
ment simply  to  pay  out  of  proceeds  when  realized,  and  so  far  as 
sufficient.  On  this  branch  of  the  case  the  inquiry  turns  upon  the 
facts,  and  the  findings  fail  to  disclose  any  such  agrement,  but 
establish  the  contrary.  They  determine  that  for  a  valuable  con- 
sideration, and  bv  an  agreement  with  Leary  and  Spruce,  the  de- 
fendants agreed  to  pay  the  plaintiff  the  debt  due  to  it.  This  find- 
ing is  free  of  any  conditions,  and  imports  an  absolute  agreement  to 
pav  at  once  and  in  full,  and  so  negatives  the  defendants'  version  of 
the  facts.  It  is  sustained  by  the  testimony  of  the  plaintiff's  wit- 
nesses, and  is  strongiv  corroborated  by  the  form  of  the  confession 
of  judgment  which  the  defendants'  attorney  drew,  which  they 
.accepted,  upon  which  they  issued  an  execution,  and  which  provides 
for  an  assumi)tion  of  the  bank  debt  absolutely  and  without  condi- 
tion. All  the  requisites  of  an  original  promise,  unaft'ected  by  the 
Statute  of  Frauds,  were  thus  explicitly  embraced  in  the  findings, 
except  one.  It  is  not  in  lerms  or  expressly  found  that  the  consid- 
eration, described  simply  as  valuable,  was,  beyond  that,  such  a 
•consideration  as  would  avoid  the  statute  because  it  consisted  of  a 
transfer  to  the  defendants  for  their  own  use  and  benefit  of  the 
•debtors'  property.  That  fact  is  involved  in  the  findings,  since  it 
is  essential  to  the  legal  conclusion,  which  cannot  stand  without  it. 
W'e  mav  look-  into  the  evidence,  therefore,  to  see  whether  it  would 


FIRST    NATTONAr.    HANK    VS.    CITAI.ISIERS.  159 

have  sustained  such  a  finding  if  it  had  been  expUcitly  made,  and 
thereupon  assume  the  fact  in  support  of  the  judgment.  {Ogden  v. 
Alexander,  140  N.  Y.  356.) 

1  can  find  in  the  proof  no  express  agreement  in  words  trans- 
ferring the  real  and  personal  estate  of  the  firm  to  the  defendants, 
but  that  there  was  such  a  transfer  in  tact  is  abundantly  established 
and  beyond  any  reasonable  doubt.  The  situation  appears  to  have 
been  this.  Leary  and  Spruce  were  manufacturers  of  files.  The 
defendants  in  New  York  were  the  regular  purchasers  at  established 
rates,  of  their  whole  product.  The  manufacturers  became  seriously 
indebted  to  their  vendees  in  the  progress  of  the  business,  and  as 
security  therefor  had  given  to  them  a  mortgage  on  their  real 
estate  for  $2,500,  dated  in  1876,  and  payable  in  one  year;  a  second- 
mortgage  on  the  same  land  for  $5,000,  dated  in  April,  1882,  and 
payable  in  one  year;  and,  as  collateral  to  the  last-named  security, 
a  chattel  mortgage  for  $5,000  covering  all  machinery  and  personal 
property  used  in  the  manufacture  of  files.  The  stock  on  hand  and 
the  equity  of  the  mortgagors  still  remained  to  them.  There  was 
due,  or  to  become  due,  on  these  securities  about  the  sum  of  $7,400 
at  the  date  of  the  final  arrangement  of  (3ctober,  1882,  assuming 
that  all  the  debt  created  prior  to  their  dates  was  protected  by  the 
mortgages.  But  an  added  indebtedness,  not  covered  by  the  securi- 
ties, had  later  accrued  in  the  form  of  two  notes  and  one  indorse- 
ment, amounting  to  about  $4,200,  no  part  of  which  had  matured 
on  October  30,  1882.  On  that  day  the  debtors  announced  to  the 
defendants  their  inability  to  pay.  Of  course  the  statement  created 
alarm.  None  of  the  mortgages  secured  future  advances,  and  the 
defendants  found  themselves  unsecured  creditors  to  the  amount 
of  over  $4,000.  The  chattel  mortgage  was  not  due  and  contained 
no  danger  clause  permitting  an  immediate  seizure.  The  whole 
stock  on  hand,  manufactured  and  unmanufactured,  was  encum- 
bered by  no  lien,  and  that  and  the  equity  under  the  mortgages  be- 
longed to  the  debtors,  was  open  to  attack  and  could  be  disposed  of 
by  the  firm.  They  estimated  the  entire  value  of  their  property  at 
Si 6,000,  which  was  the  footing  of  their  last  preceding  inventor}', 
and  claimed  it  to  be  sufficient,  not  only  to  pay  the  defendants  in 
full  but  also  the  bank  and  certain  other  creditors  wdiom  they  wished 
to  protect.  They  were  talking  of  an  assignment,  but  assured  the 
defendants  that  they  were  ready  to  give  them  a  bill  of  sale  of  all 
their  propertv.  or  any  other  security,  provided  that  the  bank  and 
other  named  creditors  were  protected.     The  defendants  agreed  to 


160  r.UAKAXTV   AND   SURi:TVSIIir. 

assume  and  pay  those  (lel)ts,  and  chose  instead  of  a  bill  of  sale  to 
take  a  confession  of  judgment.  In  that  the  debtors  swore  that 
they  were  justlx  in(lel)ted  to  the  defendants  in  a  sum  made  up  of 
the  total  debt  U)  the  latter,  and  of  the  debts  to  other  named  cred- 
itors, which  the  defendants  had  assumed  and  agreed  to  pay.  Had 
the  transaction  stopped  at  this  point  it  would  be  difficult  to  support 
the  promise  to  the  bank,  unless  U]Kjn  the  ground  of  an  intended 
purchase  by  the  defendants  of  the  debtor's  assets,  the  price  of 
which  was  secured  by  the  confession  of  judgment.  IkU  it  did  not 
stop  there.  The  defendants  could  at  once  have  levied  upon  the 
whole  personal  property,  and  advertised  a  sale  of  the  real  estate, 
but  all  that  was  needless,  "because  the  debtors  at  once  turned  over 
•the  whole  property  to  the  defendants,  and  put  them  in  entire  and 
complete  possession,  for  their  own  use  and  benefit.  Leary  aban- 
doned it  utterly  and  went  away.  Spruce  remained  as  the  hired 
servant  of  the  defendants,  working  for  wages  which  they  cut  down 
at  their  pleasure,  obeying  their  orders,  shi])ping  the  whole  manu- 
factured product  to  them  in  New  York,  drawing  on  them  for  the 
pay  roll,  and  treating  the  property  in  all  respects  as  theirs.  Not  a 
vestige  of  it  ever  came  back  to  the  debtors.  The  latter  were  willing 
to  transfer  it,  as  their  offer  of  a  bill  of  sale  proves ;  they  did  trans- 
fer it,  and  in  the  light  of  the  confession  of  judgment  and  the  prom- 
ise to  the  bank,  it  is  impossible  not  to  see  that  it  was  in  considera- 
tion of  an  agreement  by  the  defendants  to  pay  the  specified  debts. 
I  have  not  failed  to  consider  the  attempted  explanation  of 
Chalmers  and  the  argument  about  it  of  his  counsel.  The  former 
sought  to  put  himself  in  the  attitude  of  a  tenant  under  Spruce  as 
landlord,  to  claim  that  his  wages  of  $20  a  week  were  in  part  for 
rent,  and  to  show  that  the  goods  were  .sold  to  him  by  Spruce  as 
before  the  failure.  i>ut  the  latter,  though  unwillingly,  contro- 
verted the  theory,  and  Chalmers'  own  version  of  the  facts  does  not 
harmonize  with  the  explanation  made.  The  claim  that  Spruce  was 
to  remain  owner  and  work  out  the  debts  does  not  account  for 
Leary 's  abandonment  of  the  possession,  nor  Spruce's  service  for 
wages,  still  less  for  the  instant  assumption  and  payment  of  all 
expenses  and  exercise  of  complete  control  by  the  defendants.  They 
took  all  the  products,  and  if  they  continued  to  keep  the  accounts 
in  the  old  wa\-  it  was  but  a  natural  measure  of  convenience  in  order 
to  separate  the  factory  business  from  their  own,  and  be  able  to 
ascertain  its  ultimate  results.  They  took  the  confession  of  judg- 
ment as  a  guard  and  protection  against  other  creditors,  and  as  a 


FIRST   NATIONAL   BANK   VS.    C^AI.^[  KRS.  1(31 

defense  of  the  transfer  made  to  them.  They  issued  no  execution 
at  once  because  that  was  needless  to  attain  possession,  but  cUd  issue 
it  later  when  their  title  was  threatened.  That  all  this  was  done 
upon  an  understanding  and  agreement  in  accord  with  the  facts 
seems  to  me  a  natural  and  necessary  inference. 

Nor  have  I  overlooked  the  fact  that  the  confession  of  judg- 
ment was  set  aside  on  the  motion  of  a  junior  creditor.  The  defend- 
ants' attorney,  after  a  consultation  with  his  clients,  accepted  short 
notice  of  the  motion,  and  then  suffered  it  to  be  granted  by  default. 
The  probabilities  are  that  the  proceeding  was  collusive,  luit  if  not, 
it  was  one  of  the  risks  which  the  defendants  assumed  and  is  imma- 
terial to  the  result. 

1  have  reached  my  conclusion  without  reliance  upon  the  pre- 
vious decision  of  this  court  on  the  first  appeal  (120  N.  Y.  650), 
and  without  any  reference  to  the  doctrine  of  Laivrencc  v.  Fox, 
w'hich  has  played  some  part  in  the  discussion.  The  opinions  of  the 
second  division  on  the  former  appeal  in  the  case  indicate  that  a 
majority  of  the  court  did  not  agree  upon  any  one  proposition  dis- 
cussed. I  should  treat  that  judgment  as  decisive  if  it  had  decided, 
but  the  only  authoritative  determination  was  the  order  for  a  new 
trial.  I  do  not  deem  the  doctrine  of  Laivrencc  v.  Fox  involved  in 
this  controversy.  That  doctrine  applies  where  no  express  promise 
has  been  made  to  the  party  suing,  but  he  claims  the  right  to  rest 
upon  a  promise  between  other  parties  having  respect  to  the  debt 
due  to  him  and  as  having  been  made  for  his  benefit.  It  struggles 
to  obviate  a  lack  of  privity  upon  equitable  principles,  but  is  need- 
less and  has  no  proper  application  where  the  privity  exists,  and  a 
direct  promise  has  been  made  upon  which  the  action  may  rest. 
Here  we  have  the  promise,  and  if  it  is  valid  the  wdiole  prolilcm 
is  solved. 

I  think  the  promise  proved  and  found  rested  not  only  upon  a 
valuable  consideration,  but  one  of  such  character  as  to  make  the 
promise  original  and  save  it  from  the  condemnation  of  the  Statute 
of  Frauds. 

The  judgment  should  be  affirmed,  with  costs. 

All  concur,  except  H.\ight,  J.,  not  sitting. 

Judgment  affirmed. 


162  GUARANTY  AND   SURETYSHIP. 

Morris  ct  al.  vs.  Osti:rhout  axd  Hugh  art  (1884). 
55  .Mich.  262:  21  X.  W.  339. 

.    Assumpsit.     Defendants  bring  error.     Affirmed. 

T.  J.  O'Brien,  for  appellants. 
Cooper  &  Winsor,  for  appellees. 

Sherwood,  J.  The  plaintiffs,  who  are  millers  residing  at 
Reed  City,  brought  their  action  of  assumpsit  against  the  defend- 
ants, who  are  engaged  in  the  lumber  business  and  reside  at  Grand 
Rapids,  to  recover  for  a  ciuantity  of  Hour  and  mill-feed,  amount- 
ing to  the  sum  of  $482.92.  James  H.  Carey  had  a  contract  with 
defendants  wdiereby  he  was  to  do  sawing  and  make  shingles  for 
them  at  Careyville,  in  Lake  county,  where  the  defendants  had  a 
quantity  of  pine  timber.  The  flour  and  feed  w^as  purchased  by 
Carey  and  used  by  him  while  doing  the  sawing  for  defendants, 
and  when  he  made  the  purchase  he  told  the  plaintiffs  that  the 
goods  were  for  the  defendants ;  that  he  w^as  at  work  for  them,  and 
that  they  had  ordered  him  to  get  the  goods  for  them.  The  plaint- 
iffs seek  to  hold  the  defendants  liable  under  the  authority,  which 
was  verbal,  thus  claimed  to  have  been  given  Carey  to  make  the 
purchase,  and  a  subsequent  promise  claimed  to  have  been  made 
by  Hughart  to  pay  for  the  goods,  which,  however,  is  denied  by 
the  latter.  The  defendants  claim  that  l)y  the  terms  of  their  agree- 
ment with  Carey  they  were  under  no  oljligation  to  supply  the  goods 
or  to  make  advances  to  Carey,  and  that  they  never  authorized  him 
to  make  the  purchase  on  their  account. 

The  questions  at  the  circuit  were  mostly  those  of  fact,  and 
were  submitted  to  the  jury,  who,  under  the  rulings  and  charge  of 
the  court,  rendered  their  verdict  for  the  plaintiffs  for  the  amount 
claimed.  The  defendants  bring  error,  and  the  rulings  and  charge 
of  the  court  are  now  before  us  for  review. 

At  the  close  of  the  trial  the  defendants'  counsel  asked  the 
court  to  direct  a  verdict  for  the  defendants.  The  request  was 
refused. 

We  do  not  think  the  record  presents  a  case  for  the  instruc- 
tion asked.  Carey  swears,  in  substance,  that  the  defendants  gave 
him  authority  to  make  the  purchase  on  their  credit,  and  the  credi- 
bility of  his  testimony  was  for  the  jury.     If  he  stated  truly  the 


MORRIS  VS.  OSTERIIOUT.  163 

direction  sworn  to  by  him  as  coming  from  defendant  Hughart, 
the  jnry  would  be  warranted  in  tinding  that  the  defendants  au- 
diorized  the  purchase.  The  promise  would  be  by  defendants  and 
not  by  Carey,  and  therefore  not  within  the  Statute  of  Frauds. 
It  would  be  a  debt  contracted  upon  their  own  promise,  and  not  a 
liability  for  the  debt  of  another. 

It  is  alleged  as  error  that  the  court  refused  to  give  defend- 
ants' second,  eighth  and  ninth  requests  to  charge,  which  requests 
were  as  follows : 

"Second.  If  the  jury  finds  from  the  evidence  that  the  goods 
were  charged,  shipped  and  billed  to  Carey;  that  no  bill  was  ever 
sent  to  the  defendants ;  that  the  plaintiffs  took  an  order  on  the 
defendants  for  the  amount  of  the  bill,  and  afterwards  presented 
this  order  and  requested  its  acceptance  and  payment,  and  still 
retain  this  order — such  evidence  is  inconsistent  with  the  claim 
now  made  by  the  plaintiffs,  and  they  cannot  recover  in  this  action." 

"Eighth.  Under  the  undisputed  facts  in  this  case,  it  appears 
diat  Carey  is  still  liable  to  the  plaintiffs  for  the  amount  of  the 
^oods  in  question,  and  the  plaintiffs  cannot  recover  in  this  action." 

"Ninth.  It  is  not  sufficient  for  the  jury  to  find  that  Hughart 
authorized  Carey  to  buy  in  their  name  and  upon  their  credit.  They 
must  also  find  from  the  evidence  that  the  credit  was  given  to 
Osterhout  and  Hughart  and  not  to  James  H.  Carey.  And  in 
arriving  at  a  conclusion  on  this  point  they  should  consider  all  the 
acts  and  conduct  of  the  plaintiffs :  such  as  the  entry  in  their  books, 
the  shipping  of  the  goods,  the  taking  of  the  order,  their  repeated 
efforts  to  collect  it,  and  their  present  possession  of  it." 

The  second  and  eighth  requests,  we  think,  were  properly 
refused.  The  facts  stated  in  the  second  request  exclude  the  idea 
that  the  inconsistency  claimed  for  them  is  susceptible  of  explana- 
tion, but  such  is  not  the  law.  The  eighth  request  seeks  to  have 
the  court  state  what  the  undisputed  facts  show.  What  they  show 
was  a  question  for  the  jury,  and  in  this  case  cannot  be  considered 
disconnected  with  the  other  testimony  in  the  case  bearing  on  the 
same  point. 

The  circuit  judge  in  his  charge  stated  to  the  jury  that  the 
first  proposition  for  the  plaintiffs  to  establish  was  that  Carey  was 
authorized  by  defendants  to  purchase  the  goods  for  them ;  and 
second,  that  plaintiffs,  when  Carey  made  the  purchase,  relied  en- 
tirely upon  defendants,  and  not  upon  Carey,  for  the  pav ;  and  if 
they  found  in  the  affirmative  of  these  propositions  the  plaintiffs 


164  (JL'AKAX'I'V   AND   SUKl'l'VS  II 1 1'. 

would  be  entitled  to  recover ;  if  not,  the  defendants  must  prevail. 
He  further  told  them  that,  in  solvinij^  these  propositions,  they  must 
take  into  consideration  all  the  testimony  in  the  case,  including  the 
actions  of  the  parties.  We  think  diese  chari^es  sufficiently  cover 
the  substance  of  the  defendants'  ninth  request. 

We  have  carefully  examined  the  remainder  of  the  charge 
excepted  to  by  the  defendants'  counsel  and  do  not  find  any  error 
therein.  The  facts  were  for  the  jury,  and  whether  the  court 
below  or  this  court  would  or  would  not  have  come  to  the  conclu- 
sioai  reached  upon  the  testimony  is  not  for  our  consideration.  We 
find  no  error  in  the  record  committed  by  the  court,  and  here  our 
duty  ends. 

The  judgment  must  be  affirmed. 

The  other   justices  concurred. 


Baldw i  .\  z's.   H  I  i:ks   (  1 884 ) . 
/?>  ^-a-  739- 

L.  S.  Baldwin  brought  suit  against  Charles  IJiers,  and  John 
A.  Hiers,  as  guarantor,  in  a  justice's  court,  on  Alarch  22,  1881. 
The  account  attached  to  the  summons  was  in  the  name  of  Charles 
Hiers.  1'he  justice  entered  judgment  for  the  plaintifi",  an  appeal 
was  entered,  the  jury  foiuul  for  the  ])lainlift',  and  a  civiioran  was 
sued  out  by  the  defendant,  John  A.  lliers.  The  evidence  for  the 
plaintiff  on  the  trial  in  the  justice's  court  wa.s.  that  Charles  lliers 
was  the  minor  son  of  John  A.  lliers;  that  the  latter  told  plaintiff' 
to  let  Charles  and  another  son  have  goods  and  charge  them  to  the 
one  who  purchased  them  ;  to  let  them  have  goods  and  he  (John  A.) 
would  see  that  the  plaintiff'  got  the  money  for  them  ;  and  the  goods 
were  furnished  accordingly. 

Defendant,  John  A.,  denied  any  such  agreement,  or  that  he 
owed  the  account,  and  testified  that  the  son  worked  for  himself 
during  the  year.  The  son  denied  the  correctness  of  the  account, 
and  as.serted  that  he  purchased  most  of  the  goods  charged,  but 
that  some  of  the  account  was  really  for  whisky,  though  charged 
under  other  names. 

The  court  sustained  the  certiorari  and  ordered  a  new  trial. 
Plaintiff  excepted. 


MEAD  VS.   WATSON. 


165 


T.  H.  Pickett,  by  brief,  for  plaintiff  in  error. 

G".  IV.  IVarzvick;  L.  C.  Hoyle,  by  R.  J.  Jordan,  for  defendant. 

Bi.ANDL'ORD,  Justice. 

(i)  The  plaintiff  sued  the  defendant  in  a  justice's  court  as 
guarantor,  and  obtained  a  verdict  in  his  favor.  The  evidence 
showed  that  the  son  of  the  defendant  wished  to  purchase  goods 
from  the  plaintiff,  and  the  defendant  agreed  if  plaintiff  would  let 
defendant's  son  have  the  goods  he,  defendant,  would  see  it  paid. 
This  was  an  original  and  not  a  collateral  undertaking.  If  the 
premise  had  been  that  he  would  pay  the  debt  if  his  son  did  not, 
then  ^nch  a  promise  would  be  void  unless  reduced  to  writing;  it 
would  be  a  promise  to  answer  for  the  debt,  default  or  miscarriage 
of  another;  but  an  undertaking  that  if  plaintiff  would  let  de- 
fendant's son  have  goods,  he  would  see  it  paid,  or  would  pay  it  him- 
self, is  an  original  undertaking,  founded  on  a  sufficient  considera- 
tion, and  is  good  and  binding  on  defendant. 

(2)  And  the  defendant  being  sued  in  a  justice's  court  as 
guarantor  would  make  no  difference,  as  there  are  no  pleadings  in 
that  court. 

(3)  We  think  the  evidence  was  sufficient  to  sustain  the  ver- 
dict and  judgment  in  the  justice's  court,  and  would  have  been  sat- 
isfied if  the  court  below  had  allowed  the  same  to  stand,  but  as  the 
court  thought  proper  to  reverse  and  set  aside  the  judgment  of  the 
justice's  court,  we  will  not  interfere,  as  this  is  equivalent  to  the 
first  grant  of  a  new  trial.  The  court  below  is  nearer  the  parties 
and  witnesses  than  we  are.  The  testimony  is  conflicting,  and  we 
will  let  the  judgment  of  the  court  below  stand. 

Judgment  affirmed. 


Mead,  Mason  &  Co.  v.  Watson  (1885). 
57  Vt.  426. 

Assumpsit.  Heard  on  a  referee's  report,  December  Term, 
1884.  Taft,  J.,  presiding.  Judgment  for  the  plaintiffs.  The  referee 
found,  that  the  plaintiff's  were  dealers  in  doors,  windows,  and  ma- 


166  GUARANTY  AND   SURKTYSHIP. 

terials  for  house  furnishing;  that  the  defendant,  who  was  known 
to  be  responsible,  introduced  Cameron  to  th.e  plaintiffs ;  that  the 
house,  for  which  the  articles  were  purchased,  was  situate(,l  on  the 
defendant's  land ;  that  the  understanding  was,  that  when  the  house 
was  completed,  it  was  to  be  deeded  to  Cameron's  wdfe ;  that  Cam- 
eron abandoned  the  house  before  it  was  completed,  and  it  w'as 
finished  by  the  defendants,  who  retained  the  title  ;  that  the  de- 
fendant's contract  with  the  plaintiffs  was  by  parol.  The  other 
facts  are  sufficiently  stated  in  the  opinion. 

S.  M.  Filigree,  fur  the  plaintiffs. 
T.  0.  S caver,  for  the  defendant. 

The  opinion  of  the  court  was  delivered  by 

Powers,  J.  The  referee  says  the  plaintiffs  understood  "that 
whatever  Cameron  ordered  for  .said  house  for  the  plaintiffs  the 
defendant  would  guarantee  the  payment  of,"  and  the  plaintiffs 
"would  not  have  sold  said  articles  to  Cameron  except  for  this  un- 
derstanding, that  the  payment  was  guaranteed  by  the  defendant." 
Later  on  he  says,  "Those  articles  were  all  charged  to  Cameron  on 
plaintiffs'  books ;  and  plaintiffs  understood  that  they  were  to  col- 
lect the  same  of  said  Cameron,  if  possible,  and  that  the  defendant 
was  only  liable  to  pay  the  same  in  case  the  plaintiff's  were  unable 
to  make  collections  of  Cameron. 

The  contract  of  the  defendant  therefore  was  collateral  to  the 
contract  of  Cameron. 

It  is  true  that  no  debt  existed  against  Cameron  when  the 
defendant's  promise  was  made.  But  the  defendant  only  promised 
to  be  responsible  for  a  future,  debt.  His  promise  could  only  attach 
to  the  principal  obligation  of  Cameron,  when  that  obligation  came 
into  force.  The  defendant  did  not  promise  to  pay  primarily,  but 
onl}-  in  case  the  plaintiff  failed  to  collect  of  Cameron. 

If  the  future  primary  liability  of  a  principal  is  contemplated 
as  the  basis  of  the  promise  of  a  guarantor,  such  promise  is  within 
the  Statute  of  Frauds,  precisely  as  it  would  be  if  the  liability  ex- 
isted when  the  promise  was  made.  Brandt,  Sur.,  §  61  ;  BrownC;, 
St.  Fr.,  §  162;  Matson  v.  JVItarani,  2  Term,  80. 

Judgment  reversed,  and  judgment  on  the  report  for  defendant. 


JONES  VS.   BACON.  107 

Jones,  Appellant,  i's.  Bacon,  as  Surviving  Executor,  etc., 
Respondent  (1895}, 

145  N.  Y.  446 ;  40  N.  E.  216. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  fifth  judicial  department,  entered  upon  an  order  made 
October  3,  1893.  which  denied  a  motion  for  a  new  trial  and  ordered 
judgment  in  favor  of  defendant  entered  upon  an  order  non-suiting 
plaintiff. 

This  action  was  brought  to  recover  damages  for  a  breach  of 
an  oral  contract  alleged  to  have  been  made  by  James  McKechnie, 
defendant's  testator,  to  indemnify  him  in  case  of  his  indorsement 
of  certain  notes  made  by  one  Kingsbury. 

I'pon  the  trial  plaintiff  called  Kingsbury  as  a  witness  to  prove 
the  alleged  promise.  His  testimony  on  that  subject  was  objected 
to  by  defendant's  counsel  on  the  ground  that  the  witness  was  in- 
competent to  testify  in  regard  thereto  under  section  829  of  the  Code 
of  Civil  Procedure.  Plaintifif  thereupon  produced  and  proved  and 
gave  in  evidence  an  instrument  executed  by  plaintiff  under  seal,  by 
the  terms  of  which,  in  consideration  of  the  sum  of  one  dollar,  he 
released  Kingsbur}^  from  "all  liability,  responsibility  or  damages" 
sustained  or  which  might  thereafter  be  sustained  by  him  by  reason 
of  his  indorsement.  This  release  was  by  an  amended  answer  set 
up  as  a  defense. 

The  further  material  facts  are  stated  in  the  opinion. 

William  H.  Smith,  for  appellant. 

Henry  M   FieM  and  Frank  Rice,  for  respondent. 

Andrews,  Ch.  J.  The  oral  promise  of  the  defendant's  tes- 
tator to  the  plaintiff  was,  in  substance,  a  promise  of  indemnity  in 
case  the  plaintiff  would  become  indorser  on  the  note  of  Kingsbury 
to  the  banking  firm  of  McKechnie  &  Co.  for  a  debt  of  Kingsbury 
to  the  bank.  The  plaintiff  thereupon  indorsed  the  note  of  Kings- 
bury to  the  bank,  and  has  been  compelled,  to  pay  thereon  the  sum 
of  about  $16,000,  Kingsbury  having  made  default  and  being  in- 
solvent. This  is  a  statement  of  the  facts  in  the  simplest  form,  and 
the  question  arises  whether  the  oral  promise  by  the  defendant's 
testator  to  indemnify  the  plaintiff  was  void  under  the  Statute  of 
Frauds,  as  being  a  promise  to  "answer  for  the  debt,  default  or  mis- 


168  GUARANTY   AND   SURKTVSII I  P- 

carriage  of  another  person."  (2  Rev.  St.  135,  Sec.  2,  Sub.  2.) 
This  is  no  longer  an  open  questitjn  in  this  state.  It  was  decided  in 
Chapiji  V.  Merrill,  4  Wend.  657,  that  a  promise  by  one  person  tc 
indemnify  another  for  becoming  a  guaranty  for  a  third  is  not  within 
the  statute  and  need  not  be  in  writing,  and  that  the  assumption  of 
the  responsibihty  was  a  sufficient  consideration  for  the  promise. 
The  doctrine  of  Cliapin  v.  Merrill  was  approved  in  Mallory  v.  Gil- 
lett,  21  N.  Y.  412,  in  Sanders  v.  Gillespie,  59  id.  250,  and  Tighe  v. 
Morrison,  116  id.  263,  and  in  other  cases  in  this  court.  The  same 
doctrine  now  prevails  in  the  English  courts.  Thomas  v.  Cook, 
8  Barn.  &  C.  728;  Reader  v.  Kingham,  13  Com.  Bench,  N.  S.  344; 
Wildes  v.  Dudloiv,  L.  R.  19  Eq.  Cas.  198.  We  do  not  deem  it 
proper  to  reopen  the  discussion  or  to  refer  to  cases  where  a  different 
view  has  prevailed.  The  court  below  considered  the  subject  at 
large,  and  the  able  opinion  of  Bradley,  J.,  refers  to  many  of  the 
cases  on  the  subject. 

The  plaintiff  was,  therefore,  entitled  to  maintain  an  action 
except  for  his  act  in  releasing  Kingsbury  from  his  liability  for  the 
money  he  was  compelled  to  pay  on  account  of  the  indorsement. 
The  release  was  probably  essential  in  order  to  enable  the  plaintiff 
to  make  any  proof  of  tlie  agreement  for  indemnity,  since  he  could 
establish  the  promise  only  by  Kingsbury,  the  plaintiff  himself  not 
being  a  competent  witness  by  reason  of  the  death  of  the  promisor 
McKechnie,  and  there  being  no  other  person  cognizant  of  the  tran- 
saction. By  the  release  Kingsbury  was  discharged  from  all  respon- 
sibility  to  the  plaintiff.  The  plaintiff  having  paid  the  debt  in  part 
out  of  his  property,  could,  prior  to  the  release,  have  maintained  an 
action  against  Kingsbury  to  recover  the  sum  so  paid.  Butler  v. 
Wright,  20  Johns,  367 ;  Hitni  v.  Auiidon,  4  Hill,  345.  The  indem- 
nitor of  the  plaintiff",  on  restoring  to  him  this  sum  in  perfomiance 
of  the  contract  of  indemnity,  would  be  entitled  to  be  substituted  to 
the  claim  of  the  plaintiff'  against  Kingsbury.  This  stands  upon  the 
most  obvious  principles  of  natural  justice.  The  money  paid  by  the 
plaintiff  was  at  the  request  of  Kingsbury,  implied  from  the  legal 
liability  as  indorser  assumed  by  him,  and  Kingsbury  was  bound  to 
reimburse  the  plaintiff.  But,  by  an  independent  contract  between 
the  plaintiff  and  his  indemnitor,  McKechnie,  the  latter  was  also 
bound  to  save  the  plaintiff  harmless.  On  performance  of  this  obli- 
gation by  the  indemnitor,  he  would  be  entitled  to  stand  in  the  shoes 
of  the  plaintiff  as  to  his  right  to  call  upon  Kingsbury.  By  equit- 
able substitution  the  indemnitor  would  take  the  right  which  the 


HARTLEY    VS.    SANDFORJ).  169 

plaintiff  had  against  Kingsbury.  There  was  no  privity  of  con- 
tract between  the  indemnitor  and  Kingsbury,  Ijut  there  was  between 
the  plaintiff  and  Kingsbury.  On  paying  the  plaintiff'  what  he  had 
been  compelled  to  pay  for  Kingsbury,  pursuant  to  the  contract  of 
indemnity,  the  indemnitor  would  stand  as  the  equitable  assignee 
of  the  plaintiff  of  the  obligation  of  Kingsbury  to  him.  Kingsbury 
had  no  equity  to  be  relieved  from  his  obligation,  because  the  plain- 
tiff had  recourse  against  AIcKenzie.  The  plaintiff,  though  not 
strictly  such,  had  the  equities  of  a  surety  against  Kingsbury,  and 
the  equities  by  operation  of  law  would  pass  to  McKechnie  on  his 
performing  his  contract  of  indemnity,  except  for  the  release.  The 
release  of  Kingsbury  by  the  plaintiff'  materially  changed  the  rights 
and  remedies  of  the  defendant  against  Kingsbury.  It  barred  any 
claim  against  Kingsbury  in  behalf  of  the  estate  of  the  indemnitor, 
to  recover  as  the  representative  of  the  rights  of  the  plaintiff  against 
him,  in  case  the  plaintiff'  should  prevail  in  the  action.  Such  an 
interference  plainly  operates  to  discharge  the  estate  of  the  indem- 
nitor 

L'pon  the  ground  that  the  release  defeated  the  right  of  action, 
the  judgment  should  be  affirmed. 

All  concur,  except  Haight,  J.,  not  sitting. 

Judgment  affirmed. 


Hartley  vs.   Sandford   (1901). 
66  N.  J.  L.  627;  55  L.  R.  A.  206;  50  Atl.  454. 

Eiror  to  the  Supreme  Court  to  review  a  judgment  in  favor  of 
plaintiff  in  an  action  brought  to  enforce  a  promise  to  indemnify 
plaintnff  for  payments  which  he  had  been  compelled  to  make  as  a 
surety  for  defendant's  son.     Reversed. 

The  facts  are  stated  in  the  opinion. 

Mr.  John  B.  Huiiiphrcys,  for  plaintiff  in  error. 
Mr.  Zehiilon  M.  Ward,  for  defendant  in  error. 

Dixon,  J.,  delivered  the  opinion  of  the  court. 
The  material  facts  in  this  case,  as  disclosed  by  the  record, 
are  that  the  defendant's  son  was  indebted  to  M..  who  desired  addi- 


170  GUARANTY   AND  SURETYSHIP- 

tional  security ;  that  thereupon  the  defendant  apphed  to  the  plain- 
tiff to  become  surety  for  the  son,  and  promised  him  that,  if  he  was 
compelled  to  pay  the  debt,  he  (the  defendant)  would  reimburse 
him ;  that  accordingly  the  plaintiff'  became  surety  for  the  son,  and 
subsequent!}-  was  obliged  to  pay  the  debt.  This  suit  w^as  l)rouglit 
upon  the  promise,  which  was  oral  only.  It  appears  that  at  the  trial 
in  the  Passaic  circuit  the  jury  were  instructed  to  find  for  the  plain- 
tiff if  they  were  satisfied  the  promise  had  been  made ;  but  the  ques- 
tion as  to  the  legal  sufificiency  of  the  promise  was  reserved  and 
certified  to  the  supreme  court,  which  afterwards  advised  the  circuit 
that  the  promise  was  valid,  and  thereupon  judgment  was  entered 
on  the  verdict. 

In  this  court  error  has  been  assigned  on  the  charge  at  the  cir- 
cuit, as  well  as  on  the  advisory  opinion  of  the  supreme  court ;  but, 
there  being  no  bill  of  exceptions  presenting  the  charge,  the  assign- 
ment of  error  respecting  it  is  futile,  and  must  be  disregarded.  The 
assignment  upon  the  opinion  of  the  supreme  court  is  legal,  and 
presents  the  only  question  now  before  us,  w'hich  is  whether  the 
plaintift"s  suit  can  be  maintained,  in  view  of  our  statute,  "that  no 
action  shall  be  brought  to  charge  the  defendant  upon  any  special 
promise  to  answer  for  the  debt,  default,  or  miscarriage  of  another 
person,  unless  the  agreement  upon  which  such  action  shall  be 
brought,  or  some  memorandum  or  note  thereof,  shall  be  in  writing 
and  signed  by  the  person  to  l)e  cliarged  therewith  or  some  other 
person  thereunto  by  him  or  her  lawfully  authorized."  The  advice 
of  the  supreme  court  was  based  upon  its  opinion  that  under  the 
adjudications  in  this  state  the  promise  of  one  person  to  indemnify 
another  for  becoming  surety  of  a  third  is  not  within  the  statute. 
The  cases  cited  in  that  opinion  to  support  this  view  are  Apgar  v. 
Hiler,  24  N.  J.  L.  812;  Cortclyou  v.  Hoagland,  40  N.  J.  Eq.  i  ; 
and  Warren  v.  Abbctt  (N.  J.  L.)  46  Atl.  575.  Of  these,  the  only 
one  of  controlling  authority  here  is  that  of  Apgar  v.  Hilcr,  which 
is  a  decision  of  this  court.  That  decision  does  not  sustain  the  broad 
proposition  for  which  it  was  cited.  This  court  there  held  merely 
that,  between  two  persons  who  had  signed  the  same  promissory 
note  as  sureties  for  another  signer,  the  oral  promise  of  one  surety 
to  indemnify  the  other  was  valid.  This  promise  was  deemed  out- 
side of  the  statute,  because  by  signing  the  note  the  promisor  had 
himself  become  a  debtor,  and  so  his  promise  to  indemnify  was  to 
answer  for  his  own  debt.  In  Cortclyou  v.  Hoagland  several  stock- 
holders and  directors  of  a  corporation  had  promised  to  indemnify 


HARILEV    VS.    SANDFORD.  171 

another  stockholder  and  director  for  indorsing  a  corporate  note^ 
and  Warren  v.  Abbe  ft  was  of  similar  character.     In  the  Cortelyou 
Case  the  chancellor  rested  his  decision  on  Apgar  v.  Hiler,  which,, 
as  above  stated,  was  essentially  different,   and  on  Thompson  v. 
Coleman,  4  N.  J.  L.  216,  which  was  a  promise  to  indemnify  a  con- 
stable for  selling  under  execution   goods  claimed  by  an  outside 
party, — a  case  where  the  promisee  had  no  redress  except  on  the 
promise,  and  therefore  clearly  outside  of  the  statute.     If  the  deci- 
cisions  in  Cortelyou  v.  Hoagland  and  Warren  v.  Abbett  are  to  be 
supported  on  prior  New  Jersey  adjudications,  such  support  must 
be  found  in  the  doctrine  that  where  the  consideration  of  a  promise 
to  answer  for  the  debt,  default,  or  miscarriage  of  another  is  a  sub- 
stantial benefit  moving  to  the  promisor,  then  the  statute  does  not 
apply.    This  rule  was  recognized  in  Kutzmeyer  v.  Ennis,  27  N.  J. 
L.  371,  and  Cozvcnhoven  v.  Hoivell,  36  N.  J.  L.  323.    To  support 
those  decisions  on  this  rule,  it  must  be  held  that  the  payment  of  a 
corporate   debt  is   substantially  beneficial   to  the   stockholders   or 
directors  of  the  corporation, — a  proposition  which   seems   to  be 
denied  in  other  tribunals.     Browne,  Stat.  Fr.  §  164.     In  the  prom- 
ise now  under  consideration  there  was  no  such  element,  and  no 
case  has  been  found  in  our  Reports  involving  the  present  question. 
We  should  therefore  decide  the  m.atter  on  principle,  or  as  nearly 
so  as  related  adjudication  will  permit.     Looked  at  as  res  nova,  it 
seems  indisputable  that  the  defendant's  promise  was  within  the 
statute.     It  was  to  respond  to  the  plaintiff  in  case  the  defendant's 
son  should  make  default  in  the  obligation  which  he  would  come 
under  to  the  plaintiff  as  soon  as  the  plaintiff  became  surety  for 
him, — an  obligation  either  to  pay  the  debt  for  which  the  plaintiff 
was  to  be  surety,  or  to  reimburse  the  plaintiff  if  he  paid  it.    In  this 
statement  of  the  nature  of  the  promise  there  is,  I  think,  every 
element  which  seems  necessary  to  bring  a  case  within  the  purview 
of  the  statute.    The  parties,  in  giving  and  accepting  the  promise, 
contemplated  ( i )  an  obligation  by  a  third  person  to  the  promisee ; 
(2)  that  this  obligation  should  be  the  foundation  of  the  promise,. 
i.  e.,  that  the  obligation  of  the  son  to  the  promisee  should  attach 
simultaneously  with  the  suretyship  of  the  plaintiff,  and  thereupon 
should  arise  the  obligation  of  the  promisor  for  the  fulfillment  of  the 
son's   obligation;   and    (3)    that  the   obligation    of   the   promisor 
should  be  collateral  to  that  of  the  son,  ;.  e.,  if  the  latter  should  per- 
form his  obligation,  the  promisor  would  be  discharged,  while,  if 
the  promisor  was  required  to  perform  his  obligation,  that  of  the 


172  GL'ARAXTN'    AM)   SURF-TYSllIP. 

son  wouKl  not  l)o  discliar^-ed,  l)ut  only  shitted  frcmi  the  promisee 
to  the  promisor.  An  examination  of  the  cases  will  show  that  not 
many  of  them  are  in  conflict  with  this  view,  when  they  are  free 
from  diflerentiatino^  circumstances.  In  the  leading  case  of  Thomas 
V.  Cook,  8  Barn.  &  C.  728,  such  a  circumstance  appears  in  the  fact 
that  the  promisor  was  himself  a  signer  of  the  bond  against  \vhich 
he  promised  to  indemnify  the  promisee,  and  thus  the  promise  was, 
in  a  reasonable  sense,  to  answer  for  that  which,  as  to  the  promisee, 
was  the  promisor's  own  debt.  On  this  difference  may  be  explained 
the  decisions  in  Jones  1:  Letcher,  13  B.  IMon.  363  ;  Horn  v.  Bray, 
51  Jnd.  555,  19  Am.  Rep.  742;  Barry  v.  Ransom,  12  X.  Y.  462; 
Sanders  v.  Gillespie,  59  X.  Y.  250;  F  err  ell  v.  Maxzvell,  28  Ohio 
St.  383,  22  Am.  Rep.  3(,)3  ;  and  others, — resting  on  the  rule  applied 
in  Apgar  v.  Hiler,  24  X.  J.  L.  812.  The  remark  of  Bayley,  J.,  in 
TJionias  v.  Cook,  that  a  promise  to  indemnify  was  not  within  either 
the  words  or  the  policy  of  the  statute,  has  caused  much  of  the  con- 
fusion existing  on  this  subject,  but  is  more  than  counterbalanced 
by  the  observations  of  Lord  Denman  in  Grcoi  v.  CressivcU,  10 
Ad.  &  El.  453,  and  Pollock,  C.  B.,  in  Cripps  v.  PI  art  noil.  4  Best  & 
S.  414,  to  the  effect  that  a  promise  to  indemnify  may  l)e  also  an 
imdertaking  to  answer  for  the  debt  or  default  of  another,  and  that 
when  it  is  it  comes  within  the  operation  of  the  statute.  Another 
circumstance  taking  cases  out  of  the  simple  class  with  which  we 
are  now  concerned  is  that  mentioned  in  Kutsmeyer  v.  Ennis,  27 
N.  J.  L.  371,  376,  viz.,  the  existence  of  a  new  consideration  bene- 
ficial to  the  promisor,  or,  as  it  is  sometimes  expressed,  moving  to 
the  promisor.  Such  cases  are  Smith  v.  Sayzvard,  5  Me.  504;  Lucas 
V.  Chamberlain,  8  B.  Mon.  276;  Mills  v.  Broivn,  11  Iowa,  314; 
Reed  v.  Plolcomb,  31  Conn.  360;  Smith  v.  Delaney,  64  Conn.  264, 
29  Atl.  496 ;  Potter  v.  Brozvn,  35  Mich.  274 ;  Comstock  v.  Norton, 
36  Mich.  277 ;  Harrison  v.  Sazvtcll,  10  Johns.  242,  6  Am.  Dec.  337 ; 
Sanders  v.  Gillespie,  59  X'.  Y.  250;  Ti^^he  v.  Morrison,  1  16  X.  V. 
263,  5  L.  R.  A.  617,  22  N.  E.  164.  Cases  of  still  another  charac- 
ter are  sometimes  cited  in  support  of  the  statement  that  contracts 
to  indemnify  are  outside  of  the  statute,  such  as  Cripps  v.  Hartnoll, 
4  Best  &  S.  414;  Reader  v.  Kingham,  13  C.  B.  X.  S.  344;  Ander- 
son v.  S pence,  y2  Ind.  315,  37  Am.  Rep.  162;  Keesli)ig  v.  F racier, 
119  Ind.  185,  21  X.  E.  552;  Beaman  v.  Russell,  20  Vt.  205,  49  Am. 
Dec.  775.  But  these  judgments  rest  on  the  same  idea  as  Thomp- 
son V.  Coleman,  4  X.  J.  L.  216, — that  there  existed  no  other  liabil- 
ity to  the  promisee  than  that  of  the  ])romisor,  and  so  manifestly 


HAUILKV    VS.    SANDFORD.  17ii 

the  statute  was  not  applical)le.  On  the  other  hand,  there  is  suffi- 
cient judicial  authority  for  the  proposition  that  an  undertaking  to 
indemnify  a  person  for  hecoming  surety  for  another  is,  in  the 
absence  of  any  modifying  fact,  a  promise  within  the  statute. 
Green  v.  Cresswell,  lo  Ad.  &  El.  453 ;  Simpson,  v.  Nance,  i  Speers, 
L.  4;  Brozvn  v.  Adams,  i  Stew.  (Ala.)  51,  18  Am.  Dec.  36;  Kel- 
sey  V.  Hibbs,  13  Ohio  St.  340;  Clement's  Appeal,  52  Conn.  464; 
Bissig  V.  Britton,  59  Mo.  204,  21  Am.  Rep.  379;  Nugent  v.  Wolfe, 
III  Pa.  471,  56  Am.  Rep.  291,  4  Atl.  15;  Draughan  v.  Bunting, 
31  N.  C.  (9  Ired.  L.)  10;  Hurt  v.  Ford,  142  Mo.  283,  41  L.  R.  A. 
823,  44  S.  W.  228;  and  May  v.  IVilliams,  61  Miss.  126.  48  Am. 
Rep.  80, — were  decided  on  this  basis.  In  the  case  last  mentioned. 
Cooper,  J.,  stated  the  true  rules  very  clearly  and  concisely.  No 
doubt,  there  are  opposing  cases  which  cannot  be  explained  on  any 
distinguishing  circumstances.  Such  seem  to  be  Chapin  v.  Merrill, 
4  Wend.  657;  Jones  v.  Bacon,  145  N.  Y.  446,  40  N.  E.  216;. 
Du)in  V.  JVest,  5  B.  Mon.  376;  Vogel  v.  Melms,  31  Wis.  306,  11 
Am.  Rep.  608;  and  Wildes  v.  Dudlozv,  L.  R.  19  Eq.  198.  But 
some  of  these  cases  merely  follow  Thomas  v.  Cook,  8  Barn.  &  C. 
728,  without  noticing  the  distinction  which  later  discussion  has 
justified,  while  others  appear  to  have  been  induced  by  the  injus- 
tice of  a  refusal  to  enforce  a  promise  on  the  strength  of  which 
the  promisee  incurred  his  liability,  rather  than  by  a  ready  purpose 
to  execute  the  will  of  the  legislature. 

No  doubt,  injustice  may  result  fom  the  enforcement  of  the 
statutory  rule ;  but  that  rule  sprang  from  a  conviction  that  its 
adoption  would  prevent  more  wrong  than  it  would  permit,  and 
its  enactment  in  England  and  perhaps  every  state  in  this  Union 
indicates  the  generality  of  this  assurance.  Said  Mr.  Justice  Ster- 
rett  in  Nngcjit  v.  JVolfe.  in  Pa.  471.  56  .\m.  Rep.  291,  4  Atl.  15: 
"The  object  of  the  statute  is  protection  against  'fraudulent  prac- 
tices commonly  endeavored  to  be  upheld  by  perjury,'  and  it  should 
be  enforced  according  to  its  true  intent  and  meaning,  notwith- 
standing cases  of  great  hardship  may  result  therefrom."  W^ith 
more  detail  did  Chief  Justice  Shaw,  in  Nelson  v.  Boyiiton,  3  Mete. 
396,  37  Am.  Dec.  148,  say:  "The  object  of  the  statute,  manifestly, 
was  to  secure  the  highest  and  most  satisfactory  species  of  evidence 
in  a  case  where  a  party,  without  apparent  benefit  to  himself,  enters 
into  stipulations  of  suretyship,  and  where  there  would  be  great 
temptation  on  the  part  of  a  creditor,  in  danger  of  losing  his  debt 
by  the  insolvency  of  his  debtor,  to  support  a  suit  against  the  friends 


174  GUARANTY   AND   SURKTVSIIIP- 

or  relatives  of  a  debtor, — a  father,  son,  or  brother, — by  means  of 
false  evidence,  by  exaggerating  words  of  recommendation,  en- 
couragement to  forbearance,  and  requests  for  indulgence  into  posi- 
tive contracts." 

Our  conclusion  is  that  the  proniisc  proved  at  the  trial  was 
insufihcient  tO'  sustain  the  action,  that  the  jiidgmoit  for  the  plaintiff 
should  be  reversed,  and  that,  in  accordance  with  the  reservation  at 
the  trial,  a  verdict  and  ju^lgment  should  be  entered  in  favor  of 
the  defendant. 


Eastwood  vs.  Kexyon   (1840). 
II  Adol  &  El.  438;  39  E.  C.  L.  245. 

In  this  term,  (January  i6th,)  the  judgment  (if  the  court  was 
delivered  by 

Lord  Denman,  C.  J.  The  first  point  in  this  case  arose  on 
the  fourth  section  of  the  Statute  of  iM-auds,  viz.,  whether  the  prom- 
ise of  the  defendant  was  to  "answer  for  the  debt,  default,  or  mis- 
carriage of  another  person."  Upon  the  hearing  we  decided,  in 
conformity  with  the  case  of  Butteniere  v.  Hayes,  5  Mee.  &  W. 
456,  that  this  defense  might  be  set  up  under  the  plea  of  Non 
Assumpsit. 

The  facts  were  that  the  plaintift'  was  liable  to  a  Mr.  Black- 
liurn  on  a  promissory  note;  and  the  defendant,  for  a  consideration, 
■which  may  for  the  purpose  of  the  argument  be  taken  to  have  been 
sufficient,  ]:)romised  the  plaintiff  to  pay  and  discharge  the  note  to 
Blackburn.  //  the  promise  had  been  made  to  Blaekburn,  doubt- 
less the  statute  would  have  applied :  it  would  then  have  been  strictly 
.a  promise  to  answer  for  the  debt  of  another:  and  the  argument 
on  the  part  of  the  defendant  is,  that  it  is  not  less  the  debt  of 
another,  because  the  promise  is  made  to  that  other,  viz.,  the 
debtor,  and  not  to  the  creditor,  the  statute  not  having  in  terms 
stated  to  whom  the  promise,  contemplated  by  it,  is  to  be  made. 
But  upon  consideration  we  are  of  opinion  that  the  statute  applies 
only  to  promises  made  to  the  person  to  whom  another  is  answer- 
able. W'e  are  not  aware  of  any  case  in  which  the  point  has  arisen, 
or  in  which  any  attempt  has  been  made  to  put  that  construction 


ALGER    VS.    SCOVILLE.  175 

upon  the  statute  which  is  now  sought  to  be  cstabUshed.  and  which 
we  think  not  to  be  the  true  one.^ 

Rule  to  enter  verdict  for  defendant  dischargfed. 


Alger  vs.  Scoville   (1854). 
I  Gray   (Mass.)   391. 

Assumpsit.     The  facts  are  sufficiently  stated  in  the  opinion. 

C.  N.  Emerson  (/.  Siinincr  was  with  him),  for  the  defendant. 

D.  D.  Field  (of  Xew  York)  and  /.  E.  Field,  for  the  plaintiff. 

Shaw,  C.  J.  In  order  to  have  a  clear  view  of  the  question 
discussed  in  the  present  case,  which  is  assumpsit  on  a  special 
promise,  made  by  the  defendant,  it  is  necessary  to  understand 
precisely  the  facts  on  which  it  arises.  It  appears  that  when  the 
contract  was  made,  of  which  the  promise  sued  on  was  a  part,  the 
plaintiff,  being  the  owner  of  145  shares  in  the  capital  stock  of 
an  incorporated  company,  known  as  the  Duchess  County  Iron  Co., 
being  a  major  part  of  the  whole  stock,  and  the  defendant  being 
the  owner  of  a  farm  in  Monroe  county,  N.  Y.,  with  the  stock 
thereon,  the  parties  agreed  to  make  an  exchange  of  property.  At 
the  same  time  plaintiff  held  a  promissory  note  against  the  Duchess 
County  Iron  Co.  for  $3,350,  and  had  indorsed  the  notes  of  the 
Company,  which  had  been  discounted  at  various  banks  and  the 
money  received  thereon,  to  the  amount  of  about  $4,000,  which 
would  all  come  to  maturity  and  fall  due  within  four  months  from 
the  time  of  the  contract.  The  agreement  was  that  the  plaintiff 
should  assign  and  transfer  his  shares  in  the  stock  of  the  Company, 
and  also  indorse  over  his  note  against  them  to  the  defendant,  and 
that  the  defendant  should,  by  a  good  warranty  deed,  convey  the 
farm  in  Monroe  county,  with  the  stock  thereon,  to  the  plaintiff, 
and  indemnify  the  plaintiff  and  save  him  harmless  against  his 
said  endorsements.  This  was  one  entire  contract  for  one  entire 
consideration,  the  transfer  of  the  shares  and  the  company's  note 
to  the  defendant,  on  the  one  side,  being  a  consideration  for  the 
conveyance  of  the  farm  and  the  promised  indemnity  l)v  the  de- 

^Everything  except  the  opinion  on  the  one  point  is  omitted. 


170  cr  ARAN  TV    AXU   SURKTYSHl  I'- 

fendanl  to  the  plainiilT,  on  the  other.  This  contract  was  executed 
as  far  as  it  could  he  at  the  time,  by  the  transfer  of  the  shares  and 
the  delivery  of  the  note  to  the  defendant,  and  a  conveyance  of  the 
farm  and  stock  by  the  defendant  to  the  plaintiff ;  but  the  promise 
to  indemnify  the  ])laintif-f  against  the  notes  then  outstanding  was 
something  to  be  done  in  future,  and  was  necessarily  executory. 
Afterwards,  when  the  nutcs  outstanding  at  l)anks  became  (hie, 
the  plaintiff  was  called  on,  as  indorser,  to  pay  them,  and  paid 
them  accordingly;  and  this  action  is  brought  on  the  defendant's 
promise  to  indemnif>'  him  and  save  him  harmless  from  his  liability 
on  these  notes. 

The  ground  of  defense  is,  that  this  was  a  promise  to  pay  the 
debt  of  another,  and  so,  by  force  of  the  Statute  of  Frauds,  no 
action  can  be  maintained  upon  it  unless  proved  by  a  promise  in 
writing,  signed  by  the  party  promising.     This  is  the  question. 

The  precise  provision  in  our  statute  is  as  follows:  "No  action 
shall  be  brought  to  charge  any  person  upon  any  special  promise 
to  answer  for  the  del)t,  default  or  misdoings  of  another,  unless  the 
promise,  or  some  memorandum  or  note  thereof,  shall  be  in  writ- 
ing and  signed  by  the  ]5arty  to  be  charged  therewith,  or  by  some 
person  thereunto  l)y  hnn  lawfully  authorized."  Rev.  Sts.  c.  74, 
§  I.  This  enactment  is  in  nearly  if  not  precisely  the  same 
terms  with  that  of  29  Car.  2  c.  3 ;  so  diat  adjudications  on  the 
construction  of  the  one  apply  v.'ith  equal  force  to  the  other. 

It  is  not  objected  that  the  case  is  within  the  other  branch  of 
the  Statute  of  Frauds,  on  the  ground  that  it  was  part  of  one 
entire  transaction,  a  part  of  which  was  for  the  conveyance  of 
real  estate,  and  on  that  account  the  promise  could  not  be  given 
in  evidence  to  support  an  action,  not  being  in  writing.  All  that 
part  of  the  contract,  looking  to  the  conveyance  of  real  estate,  hav- 
ing been  executed,  it  stood  only  as  a  consideration  t\)r  the  execu- 
torv  undertaking  relied  on  in  support  of  this  action  ;  and  no  part 
of  the  contract  remains  unperformed,  except  the  defendant's  prom- 
ise to  indenmifv  the  ])laintiff  against  the  payment  of  the  out- 
standing note,  which  is  the  subject  of  this  suit. 

In  regard  to  the  clause  of  the  statute  relied  on,  the  court 
are  of  the  opinion  diat  the  promise  is  in  no  sense,  in  which  these 
terms  are  used  in  the  Statute  of  Frauds,  a  promise  to  pay  the 
debt  of  another:  1)ut  it  is  a  promise  to  the  ])laintifF,  on  a  consid- 
eration moving  from  the  plaintiff  to  the  defendant,  to  indemnify 
the   plaintiff   again.st   a   contingent   liability,    which    he    is   under, 


ALdER    VS.    SCOVILLE. 


177 


as  indorser,  to  certain  banks,  to  pay  certain  notes  given  by  the 
Duchess  County  Iron  Co.  as  promisors,  if  they  should  fail  to 
pay  them  at  maturity.  The  Iron  Company  were  not  then  indebted 
to  the  plaintiff,  nor  would  they  become  indebted  to  him,  until 
the  happening-  of  the  contingency  of  their  not  paying  the  notes, 
and  his  being  called  on  to  pay  them. 

There  being  no  debt  due  to  the  plaintiff  from  the  Iron  Com- 
pany or  anybody  else,  on  account  of  those  notes,  the  promise  of 
the  defendant  was  not  a  suretyship  or  guaranty,  or  responsibility 
to  the  plaintiff'  for  any  debt  or  duty  due  to  him,  but  a  mere  con- 
tract of  mdemnity  against  a  possible  liability.  Suppose,  instead 
of  a  contingent  liability,  it  had  been  an  absolute  one,  a  debt  due 
from  himself  to  a  third  person,  a  promise  to  him,  made  by  a  third 
person,  on  a  valuable  consideration  moving  from  him,  to  pay 
that  debt  and  save  the  plaintiff'  harmless,  is  hot  a  promise  to  pay 
the  debt  of  another,  but  a  promise  to  pay  the  plaintiff's  own  debt, 
which  is  equivalent  to  a  promise  to  pay  the  money  to  him,  by 
which  he  himself  could  discharge  the  debt.  The  promise  of  the 
defendant  to  the  plaintiff  was,  that  he  should  not  be  called  on 
as  indorser  to  pay  the  notes,  and  to  save  him  harmless  from  such 
call ;  and  the  promise  was  broken,  and  the  cause  of  action  accrued, 
when  the  defendant  failed  to  take  up  the  notes  of  the  Company 
as  thev  fell  due,  and  permitted  the  plaintiff  to  be  called  on  and 
compelled  to  pay  them. 

In  a  case  m  the  Queen's  Bench,  comparatively  recent,  the 
Court  say:  "We  are  of  opinion  that  the  statute  applies  only  to 
promises  made  to  the  person  to  whom  another  is  answerable." 
Eastzi'ood  v.  Kcityon,  ii  Ad.  &  El.  446,  and  3  P.  &  Dav.  282. 

The  same  principle  has  been  adopted  in  several  cases  in  this 
commonwealth. 

A  promise  to  pay  the  public  taxes  which  may  be  levied  on  an 
estate  sold  by  A  to  B,  made  by  the  seller,  as  one  of  the  terms  of 
sale,  need  not  be  in  writing,  not  being  a  promise  by  A  to  B  to 
pav  a  debt  due  to  B  from  another  person,  but  to  pa}-  a  sum  which 
would  otherwise  be  a  charge  upon  the  promisee.  Preble  v. 
Baldzvin.  6  Cush.  552. 

The  distinction  between  the  common  case,  where  the  promise 
is  designed  to  secure  the  debt  of  another  person  to  the  promisee 
and  so  a  guarant}-,  and  where  the  promise  is  made  for  another  and 
different  purpose,  is  stated,  and  the  cases  on  the  subject  are  cited,, 
in  Nelson  v.  Boynton,  3  Alet.  396. 
13 


178  GUARANTY   AND   SURETYSHIP- 

That  the  promise  to  one  to  pay  his  due  debt,  a  debt  due  from 
him  to  another,  is  not  within  the  Statute  of  Frauds,  and  need  not 
be  in  writing,  was  decided  in  Pike  v.  Brazen,  y  Cush.  136. 

(2)  JjUt  there  is  another  ground  on  which  we  are  of 
opinion  that  this  promise  was  not  within  the  Statute  of  Frauds, 
supposing  it  could  be  construed  to  he  a  promise,  the  effect  of 
which  if  performed  would  amount  to  a  guaranty  that  the  Iron 
Company,  as  promisors  on  the  outstanding  notes,  should  pay 
those  notes,  and  so  save  the  plaintiff"  from  his  lialnlity  thereon 
as  indorser,  and  so,  although  not  a  promise  to  pay  the  debt  of 
another,  yet  it  might  be  construed  to  be  a  special  promise  to 
answer  for  the  default  oi  another,  to-wit :  the  Iron  Company. 

From  the  earliest  period  after  the  statute  was  passed  in  Eng- 
land, the  judicial  construction  there,  has  been,  not  merely  that 
there  nuisl  be  a  good  consideration  ( that  is  required  by  the  com- 
mon law  to  give  legal  eff'ect  to  all  contracts)  ;  but  to  require  the 
higher  species  of  evidence,  that  of  writing,  where  guaranty  or 
suretyship  has  been  the  leading  or  apparent  object.  But  it  has 
been  held  at  the  same  time  that  when  the  leading  and  obvious 
object  of  the  promisor  was  to  induce  tlie  ]jromisee  to  forego  some 
lien  interest,  benefit  or  advantage,  held  by  him,  and  to  transfer 
that  interest,  or  confer  that  or  some  equivalent  benefit  on  the 
promisor,  although  the  effect  may  be  to  discharge  another  person 
from  an  obligation,  still  it  is  a  new,  independent  and  original  con- 
tract between  the  parties,  and  is  not  within  the  Statute  of  Frauds 
required  to  be  in  writing.  The  leading  case  is  JVilliains  v. 
Leper.  3  lUn-r.  1886,  where  the  landlord,  having  a  lien  on  his 
tenant's  goods  for  arrears  of  rent,  which -goods  had  been  assigned, 
and  were  about  to  be  sold  by  the  assignees,  entered  to  distrain, 
when  the  broker  and  agent  promised  the  landlord  to  pay  him  his 
rent  if  he  would  forbear  distraining.  Though  the  effect  would 
be  to  discharge  the  debt  of  the  tenant,  it  was  held  not  to  be  within 
the  Statute  of  Frauds  requiring  a  note  in  writing.  To  the  same 
effect  is  Castling  v.  .hibcrt,  2  East.  325. 

This  doctrine  is  fully  sustained  by  the  New  York  cases.  It 
is  the  third  class  of  cases  mentioned  by  Kent,  C.  J.,  in  Leonard  v. 
VrcdenburgJi,  8  Johns.  39.  This  third  class  of  cases  is,  "when 
the  promise  to  pay  the  debt  of  another  arises  out  of  some  new 
and  original  consideration  of  benefit  or  harm  moving  between  the 
newh-  contracting  parties."     This  class  is  not  within  the  Statute. 


ALGER    VS.    SCOVILLE.  179 

This    point    is    confirmed    and   the   cases   are    fully    reviewed    by 
S-WACiE,  C.  j.,  in  Farley  v.  Cleveland,  4  Cow.  432. 

The  same  doctrine  is  recognized  in  this  commonwealth.  The 
case  of  Nelson  v.  Boynton,  3  Met.  402,  after  stating"  the  distinc- 
tion is  summed  up  thus:  "That  cases  are  not  considered  as  coming 
within  the  vStatute,  when  the  party  promising  has  for  his  object 
a  benefit  which  he  did  not  before  enjoy,  accruing  immediately  to 
himself;  but  where  the  object  of  the  promise  is  to  obtain  a  release 
of  the  person  or  property  of  the  debtor,  or  other  forbearance  or 
benefit  to  him,  it  is  within  the  Statute."  One  of  the  last  cases 
on  the  subject  substantially  affirms  the  same  principles.  Curtis  v, 
Brozvn,  5  Cush.  488. 

Supposing  this  rule  to  be  well  established,  we  are  then  to 
look  at  the  facts  of  the  present  case  to  see  whether  it  applies. 

We  have  already  stated,  that  we  consider  the  whole  as  one 
entire  transaction,  the  conveyance  of  the  farm  and  the  promise 
of  indemnity  by  the  defendant,  on  the  one  side,  were  the  con- 
sideration of  the  transfer  of  shares  in  the  Iron  Company  and 
the  assignment  of  the  note  due  the  plaintiff  from  the  Iron  Com- 
pany, on  the  other.  Then,  what  were  the  relations  of  the  parties 
before  and  after  the  making  of  this  contract?  The  plaintilf  pre- 
viously was  the  beneficial  owner  of  more  than  one-half  oi  the  entire 
property  and  capital  of  the  company,  and  the  only  two  other 
shareholders  held  together  an  amount  of  the  stock  less  than  that 
held  by  the  plaintiff.  I  believe  it  was  stated  in  the  argument  that 
the  piaintifi:  was  president,  treasurer  or  principal  manager  of 
the  affairs  of  the  company.  But  this  is  not  material.  His  large 
interests  would  give  him  a  large  influence,  if  not  a  controlling 
power,  over  the  funds  and  affairs  of  the  company,  and  wdiilst 
holding  such  interest,  he  would  have  a  powerful  voice,  if  not  a 
decisive  direction,  in  seeing  that  the  funds  of  the  company  should 
be  applied  to  the  payment  of  its  notes,  of  which  he  was  indorser. 
Is  it  to  be  supposed  that,  acting  on  ordinary  motives,  he  w^ould 
put  his  power  entirely  out  of  his  control,  and  yet  leave  himself 
liable  to  the  payment  of  these  notes,  as  their  indorser? 

Again  ;  the  evidence  shows,  to  use  the  significant  figure  of  the 
witnesses,  that  in  regard  to  the  Iron  Company  the  defendant  was 
to  step  into  the  plaintiff's  shoes.  Was  he  to  take  the  plaintiff's 
large  interest  in  the  stock  and  property  of  the  Iron  Company,  con- 
stituting a  natural  fund  out  of  which  these  indorsed  notes  were 
to  be  paid,  w^ithout  taking  it  subject  to  the  incumbrances?     Pay- 


180  GL'ARAXTY   AND   SURI:TYSIIIP- 

ing  the  debts  of  tlie  company,  after  the  defendaiU  ha<l  l^econie  a 
shareholder  of  more  than  half,  would  in  effect,  and  to  the  extent 
of  his  interest  in  those  shares,  invn-c  to  his  own  direct  ])enetit. 

W'e  are  therefore  of  opinion,  that  this  was  a  new  and  original 
contract  between  these  parties,  originating  in  a  new  consideration 
moving  from  the  plaintiff  to  the  defendant,  in  effect  placing  the 
funds  in  the  hands  of  the  defendant,  out  of  which  these  notes,  in 
due  course  of  business,  would  be  expected  to  l)e  paid.  The  prom- 
ise was  part  of  a  larger  transaction  constituting  an  entire  con- 
tract, and  we  have  no  reason  to  believe,  and  have  no  authority 
to  declare,  that  the  ])laintift'  would  have  parted  with  liis  interest 
in  the  compa'.'.v  without  a  simultaneous  obligation  to  be  indem- 
nified against  his  liabilities  for  the  company,  l^'or  these  reasons, 
we  are  of  opinion  that  this  promise  was  not  within  the  statute,  and 
that  an  action  will  lie  upon  it,  tbotigh  not  made  in  writing. 

(3)  It  was  urged,  on  the  ])art  of  the  defendant,  that  this 
l)romise  of  indemnity  against  the  outstanding  notes  was  without 
consideration,  because  the  exchange  f)f  property  was  eft'ected 
independent  of  this  ])romise,  and  that  the  promise  was  subse- 
(juent  and  gratuitous. 

W'e  have  again  recurred  to  the  facts  stated  in  the  report, 
and  can  perceive  in  them  no  color  for  such  an  argument.  Both 
witnesses  speak  of  it  as  one  bargain,  made  at  one  time,  and  exe- 
cuted as  far  as  it  could  then  be  executed.  One  of  them  says, 
the  bargain  then  made  was,  that  Scoville  was  to  take  the  interest 
Alger  had  in  the  Company,  saving  him  harmless  from  3JI  liability, 
or,  in  other  words,  to  ste])  into  his  shoes,  as  far  as  Alger  was 
in  any  way  interested  in  the  Com])any  ;  the  indorsed  outstanding 
notes  were  referred  to,  and  it  was  then  agreed  between  the  parties 
that  Scoville  was  to  pay  and  take  up  all  said  notes  as  they  sev- 
erallv  fell  due.  Another  witness,  present  at  the  same  time,  testi- 
fied to  the  same  facts.  The  use  of  the  present  participle,  "saving 
him  harmless."  immediately  after  the  words  "taking  his  interest 
in  the  com])any,"  c(JU])les  the  two  things  inseparably  together  as 
one  bargain.  The  one  was  a  consideration  for  the  other.  It  was 
a  material  and  essential  part  of  the  entire  contract,  for  which  the 
transfer  of  the  .shares  and  the  assignment  of  the  company's  note 
were  the  consideration.  The  court  are  therefore  of  opinion,  that 
the  instruction  given  to  the  jury  was  right,  and  that  judgment  be 
entered  u])on  the  verdict  for  the  i)laintiff. 

Judgment  on  the  verdict. 


BUCKMYRVS.  DARXAI.I..  181 

BUCKMVR   7'S.    DaKXAI.I,    (  I704), 

2  Lord  Raymond  1085  ;  5  Mod.  248  ;  Salk.  27  ;  3  Salk.  1 5  ;  Holt  606. 

An  action  upon  the  case  wherein  the  plaintiff  declared  that 
the  defendant,  in  consideration  the  plaintitf ,  at  his  re(iuest  locarct 
et  dclibcrarct  ciiidaiii  Josepho  English  a  gelding  of  the  plaintiff's 
ad  cquitandnui  ct  itiiwniiidmn  usque  ad  Reading  /;/  comitatu 
Berks,  assumpsit  ct  proinisit  the  plaintiff,  quod  the  said  Joseph 
aiid  Charles  the  said  gelding  to  the  plaintiff  redeliberarent,  etc. 
Upon  }wn  assniupsit  pleaded,  this  cause  came  to  trial  before  Holt, 
Chief  Justice,  at  Westminster  Hall ;  and  the  counsel  for  the  defend- 
ant insisting  that  the  plaintiff"  ought  to  produce  a  note  in  writing  of 
this  promise,  within  the  statute  of  frauds,  29  Car.  2,  c.  3>  s.  4;  and 
the  Chief  Justice  doubting  of  it,  a  case  was  made  of  it  and  ordered 
to  be  moved  in  court,  to  have  the  opinion  of  the  other  judges.  And 
now  it  was  argued  this  term  by  Sci'gcaut  Darnall  for  the  defend- 
ant and  Mi\  Raymond  for  the  plaintiff.  And  it  was  insisted  for 
the  defendant  that  this  case  was  within  the  statute  of  frauds. 
29  Car.  2,  c.  3,  s.  4,  for  it  was  a  promise  to  answer  for  the  default 
and  miscarriage  of  the  person  the  horse  was  lent  to.  The  very 
letting  out  and  delivery  of  the  horse  to  English  implies  a  con- 
tract by  English  to  re-deliver  him,  and  he  is  bound  by  law  so  to 
do,  and  consequently  the  defendant  is  to  answer  for  the  default 
of  another.  In  a  case,  2  Will.  &  Mar.,  your  Lordship  settled  this 
rule,  that  where  an  action  will  lie  against  the  party  himself,  there 
an  undertaking  by  J.  S.  is  within  the  statute;  and  where  no  action 
will  lie  against  the  party  himself,  there  it  is  otherwise.  And  there- 
fore I  agree  this  case,  that  a  man  should  say  to  another,  "Do  you 
build  a  house  for  J.  S.  and  I  will  pay  you,"  that  case  is  not  withiit 
the  statute,  because  there  J.  S.  is  not  liable.  But  this  case  is  not 
more  than  this,  if  a  man  should  say,  "Do  you  let  J.  S.  have  goods, 
and  if  he  does  not  pay  you  T  will,"  and  this  is  within  the  statute, 
because  an  action  will  lie  against  J.  S.  for  the  money  for  the 
goods.  Or,  if  a  man  should  say,  "Take  J.  S.  into  your  service,  and 
if  he  does  not  serve  you  faithfully,  or  if  he  wrongs  you,  I  will  be 
responsible,"  that  is  also  withni  the  statute. 

To  this  it  was  answered  for  the  plaintiff,  that  here  the  credit 
was  wholly  given  to  the  pefendant;  that,  that  rule  of  the  sergeant's 
must  be  understood,  where  an  action  does  or  does  not  lie  against 
the  party  himself  on  the  contract,  and  not  where  an  action  does 


182  GUARANTY   AND   SURETYSHIP- 

or  does  not  lie  against  iiini  upon  collateral  respects.  And  there- 
fore in  this  case,  for  an  actual  conversion,  or  for  refusing  to  re- 
deliver the  horse,  English  nia\-  l)e  charged  in  trover  or  detinue, 
yet,  he  being  not  chargeable  upon  the  contract,  the  case  is  not 
within  the  statute.  This  contract  cannot  be  said  properly  to  be  a 
promise  to  answer  for  the  default  or  miscarriage  of  another,  un- 
less English  were  liable  by  the  first  contract. 

Upon  the  first  motion  and  arguing  this  case,  the  three  judges 
against  Powys  seemed  to  be  of  opinion  that  this  case  was  not 
within  the  statute,  because  English  v^'as  not  liable  upon  the  con- 
tract ;  but  if  any  action  could  be  maintained  against  him.  it  must  be 
for  a  subsequent  wrong  in  detaining  the  horse,  or  actually  convert- 
ing it  to  his  own  use.  .A.nd  Powell,  Justice,  said  that  that  rule,  of 
what  things  shall  be  within  the  statute,  is  not  confined  to  those 
cases  only,  where  there  is  no  remedy  at  all  against  the  other,  but 
where  there  is  not  any  remedy  against  him  on  the  same  contract. 
This  case  is  just  like  the  case  where  a  man  says,  "Send  goods  to 
such  a  one,  and  f  will  pay  you,"  that  is  not  within  the  statute,  for 
the  seller  does  not  trust  the  person  he  sends  the  goods  to.  So  here 
the  stablekeeper  only  trusted  the  defendant,  and  an  action  on  the 
contract  will  not  lie  against  English,  but  for  a  tort  subsequent  he 
may  be  charged  in  detinue,  or  trover  and  conversion,  which  is  a 
collateral  action. 

Powys,  Justice,  said  that  there  was  a  trust  to  English,  for 
the  very  lending  of  the  horse  necessarily  implies  a  trust  to  the 
person  he  is  lent  to,  and  consequently  the  defendant  in  this  case  is 
to  answer  for  the  default  of  another,  and  is  within  the  statute. 

Powell,  Justice,  agreed,  diat  if  a  man  should  say,  "Lend 
J.  S.  a  horse,  and  I  will  undertake  he  shall  pay  the  hire  of  it," 
or,  "Send  J.  S.  goods,  and  I  will  undertake  he  shall  pay  you,"  that 
those  cases  would  be  within  the  statute ;  and  agreed  with  Powys, 
tliat  if  any  trust  were  given  to  English,  then  the  case  would  be 
within  the  statute.  But  he  and  the  Chief  Justice  and  Gould  held, 
that  here  was  no  credit  given  to  English,  and  the  Chief  Justice 
agreed  with  him,  that  if  there  had,  this  promise  would  have  been 
but  an  additional  security,  and  within  the  statute.  And  the  Chief 
Justice  said,  that  if  a  man  should  say,  "Let  J.  S.  ride  your  horse 
to  Reading,  and  1  will  pay  you  the  hire,"  that  is  not  within  the 
statute,  no  more  than  if  a  man  should  say,  "Deliver  cloth  to  J.  .S., 
and  I  will  pay  you."  He  said  also,  that  a  bailee  of  an  horse  for 
hire  is  not  bound  to  re-deliver  him  at  all  events,  but  if  he  be 


MEASK  VS.    WAGNER. 


183 


robbed  of  him  without  fraud  in  him,  he  is  excused.     And  so  it 
was  ruled  in  the  case  of  Coggs  v.  Bernard,  2  Stra.  916. 

The  last  day  of  the  term  the  Chief  Justice  delivered  the  opin- 
ion of  the  Court.  He  said  that  the  question  had  been  proposed  at 
a  meeting  of  judges,  and  that  there  had  been  a  great  variety  ot 
opinions  between  them,  Ijecause  the  horse  was  lent  wholly  upon 
the  credit  of  the  defendant;  but  that  the  judges  of  this  court  were 
all  of  opinion  that  the  case  was  within  the  statute.  The  objection 
that  was  made  was,  that  if  English  did  not  re-deliver  the  horse, 
he  was  not  chargeable  in  an  action  upon  the  promise,  but  in  trover 
or  detinue,  which  are  founded  upon  the  tort,  and  are  for  a  matter 
subsequent  to  the  agreement.  But  I  answered  that  English  may 
be  charged  on  the  bailment  in  detinue  on  the  original  delivery, 
and  a  detinue  is  the  adequate  remedy,  and  upon  the  delivery  Eng- 
lish is  liable  in  detinue,  and  consequently  this  promise  by  the 
defendant  is  collateral,  and  is  within  the  reason  and  the  very  words 
of  the  statute ;  and  is  as  much  so  as  if,  where  a  man  was  indebted, 
J.  S.,  in  consideration  that  the  debtee  would  forbear  the  man, 
should  promise  to  pay  hini  the  debt,  such  a  promise  is  void  unless 
it  be  in  writing.  Suppose  a  man  comes  with  another  to  a  shop  to 
buy,  and  the  shopkeeper  should  say,  'T  will  not  sell  him  the  goods 
unless  you  will  undertake  he  shall  pay  me  for  them,"  such  a  prom- 
ise is  within  the  statute ;  otherwise,  if  a  man  had  been  the  person 
to  pay  for  the  goods  originally.  So  here  detinue  lies  against  Eng- 
lish the  principal;  and  the  plaintiff  having  this  remedy  against 
English  the  principal,  cannot  have  an  action  against  the  defendant 
the  undertaker,  unless  there  had  been  a  note  in  writing. 


Mease  vs.  Wagner  (1821). 
I  McCord  (S.  Car.)  395. 

This  was  an  action  for  the  articles  furnished  the  funeral  of 
Mrs.  Bradley,  at  the  request  and  by  order  of  the  defendant.  Mrs. 
Bradley  was  the  widow  of  Dr.  Bradley,  who  left  her  his  estate 
during' life,  remainder  to  his  nephew,  John  Bradley.  Mrs.  Brad- 
ley, prior  to  her  death,  expressed  a  wish  to  be  buried  in  a  particu- 
lar manner.  As  soon  as  she  expired,  the  defendant  was 
sent  for  as  a  friend  of  the  family,  and  she  undertook  to  procure 


184  GUARANTY  AND  SURETYSHIP- 

the  articles  necessary  to  such  a  funeral  as  the  deceased  had  desired. 
She  proceeded  to  the  shop  of  the  plaintiff,  where  she  selected  the 
articles  re(|uired.  sayint;  they  were  for  Mrs.  Bradley's  funeral. 
She  was  asked  "hy  whom  they  were  to  be  paid  for?"  She  re- 
plied, "char.s^e  them  to  the  estate  of  Dr.  Bradley,  and  as  soon  as  his 
nephew  comes  to  town  lie  will  ])ay  for  them,  or  I  will."  The 
articles  furnished  were  such  as  were  suitable  to  the  condition  in 
which  Mrs.  Bradley  had  lived. 

(Jn  the  arrival  of  the  nephew  in  the  city,  the  account  was  pre- 
sented to  him,  and  he  refused  to  pay  it,  saying-  that  the  defendani 
had  no  authdritv  to  i)rocure  the  articles  at  his  expense.  The  de- 
fendant was  then  applied  to,  and  she  refused  payment.  Some 
time  after  this  refusal,  one  of  the  w  ilnesses  remonstrated  with  the 
nephew  on  the  impropriety  of  his  conduct,  when  he  said  he  would 
pay  it.  but  did  not.  It  apj^eared  that  a  Miss  Teabout  adminis- 
tered upon  the  estate  of  .Mrs.   Bradley. 

The  counsel  for  the  defendant  contended  that  she  was  not 
responsible,  as  it  was  a  collateral  and  not  an  original  undertaking. 

The  court  charged  the  jury  that  it  was  an  original,  and  not 
a  collateral  undertaking,  and  that  the  defendant  was  liable. 

A  verdict  was  accordingly  rendered  for  the  ])laintiff.  A  mo- 
tion was  now  made  for  a  new  trial,  on  the  ground  that  the  court 
misdirected  the  jury. 

Mr.  Justice  Huckr  delivered  the  opinion  of  the  court. 

It  has  been  regarded  as  settled  doctrine  ever  since  the  case 
of  Ihickniyr  v.  Paniall.  (2  Lord  Raym«)n(l.  1085;  Robt.  on  I'rauds, 
218),  that  when  no  action  will  lie  against  the  party  undertaken 
for,  it  is  an  (jriginal  promise.  If  .V  promise  B  that  in  considera- 
tion of  his  doing  a  particular  act,  C  shall  pay  him  such  a  sum, 
and  if  C  do  not  pay  him,  he.  A,  will  pay  the  same;  this  is  said  to 
be  no  collateral  undertaking  on  the  part  of  A  unless  C  was  privy  to 
the  contract,  and  recognized  himself  as  a  debtor  also.  ( Fitzgib- 
bon,  302:  Rol)t.  on  l^Tauds,  223.)  In  the  case  before  me,  the 
defendant  undertook  for  the  representative  of  Dr.  Bradley,  against 
whom  no  action  could  lie  for  the  articles  furnished  for  the  funeral 
of  Mrs.  Bradley.  And  there  was  no  privity  of  contract  between 
the  ])laiuiitT  and  the  nephew  of  Dr.  Bradley.  I'.ut  it  has  been 
urged,  that  the  subsequent  promise  of  the  nephew  had  a  retro- 
active operation,  and  rendered  him  liable ;  but  if  he  were  not  liable 
before  the  promise  was  made,  he  could  not  be  .so  afterwards.  It 
was  not  in  writing,  and  was  iiuduiii  pactum.     Had  the  defendant 


WF.r.CH  vs.    .MAR\'TN'. 


185 


undertaken  for  flic  state  or  legal  representative  of  Mrs.  Bradley, 
who  was  legally  bound  to  pay  the  expenses  of  her  funeral,  it 
would  have  been  a  different  question;  but  she  unfortunately  under- 
took for  one  wlio  was  not  responsible,  and  who  was  so  far  from 
being  privy  to  the  contract,  or  acknowledging  himself  a  debtor, 
refused  payment  und  denied  the  authority  of  the  defendant  to  ren- 
der him  responsil)le. 

1  am  of  opinion,  therefore,  that  the  motion  nnist  l)e  refused. 

NoTT,  Johnson,  Richardson  and  Colcock,  JJ.,  concurred. 

Mr.  Justice  Gantt  dissented. 

King,  for  the  motion. 

Hunt,  contra. 


Welch  "-x  jMarvin  (1877). 
36  Mich.  59. 

Error  to  Ionia  Circuit. 

Sessions  &  Strickland  and  J.  B.  Morse,  for  plaintiff"  in  error. 
Lemuel  Clnte,  for  defendant  in  error. 

Marston,  J.  ^larvin,  who  was  plaintiff'  below,  brought  an 
action  of  assumpsit  to  recover  the  value  of  a  certain  meat  furnished 
by  him  to  be  used  in  a  boarding  train  upon  the  D.,  L.  &  L.  M.  R.  R. 
It  appears  from  the  testimony  that  one  Hiram  Cook,  who  was 
engaged  in  keeping  such  boarding  car,  had  obtained  his  supply 
of  meat  from  the  plaintiff,  and  in  June,  1875,  was  owing  him  for 
meats  furnished  $117.78;  that  about  the  T4th  of  June  he  refused 
to  trust  Cook  any  longer  or  furnish  him  with  any  more  meat,  unless 
some  diff'erent  arrangements  were  made ;  that  Welch,  who  had 
been  supplying  Cook  with  groceries,  went  to  see  Marvin,  in 
company  with  Cook,  to  make  some  arrangement  about  this  matter. 
Marfan  testified  that  he  (Welch)  then  said:  'This  pay  is 
now  assigned  over  to  me  from  the  railroad  company,  and  I 
am  going  to  become  responsible  for  the  meat,  and  I  want  meat 
to  run  this  train,  and  what  meat  }'ou  let  Cook  have  from  now,  I 
will  pay  you  for."     Marvin  then  told  ^^^elch  that  Cook  had  got 


186  GUARAXTY   AND   SURETYSHIP- 

meat  there  from  the  middle  of  April  up  to  the  first  of  June,  that 
had  not  been  paid  for,  and  that  he  would  not  let  any  more  meat 
go  until  he  was  paid  for  that;  that  Welch  replied,  "  Well,  you  get 
an  order  on  me  from  Cook  and  I  will  accept  that  order,  and  pay 
you  as  fast  as  the  money  comes  into  my  hands  to  pay  that."  The 
next  morning;  an  order  was  drawn  uj)  for  $117.78;  this 
order  was  accepted  by  Welch,  providing  money  enough  came  into 
his  hands  from  the  company  to  pay  his  own  account  first,  the  bal- 
ance to  be  paid  on  this  order.  Different  amounts  were  paid  by 
Welch,  in  all  amounting  to  two  hundred  and  fifteen  dollars ;  but  it 
does  not  appear  that  any  other  orders  were  given.  It  also  appears 
from  plaintiff's  testimony  that  he,  in  September,  received  an  order" 
from  Cook  on  the  railroad  company  for  one  hundred  dollars,  which 
lie  endeavored  to  collect.  After  the  arrangement  made  with  Welch, 
plaintiff'  continued  to  charge  the  meats  thereafter  delivered  to- 
Cook,  in  the  same  manner  he  had  previously  done,  no  change  hav- 
ing been  made  on  his  books  in  the  manner  of  keeping  the  account. 
There  was  considerable  conflicting  evidence,  as  is  usually  expected 
in  such  cases,  as  to  what  the  agreement  really  w-as,  as  to  the  reason 
of  continuing  to  charge  the  meat  to  Cook  upon  plaintiff's  books, 
and  the  efforts  made  to  collect  the  amount. 

The  courts,  in  charging  the  jury,  very  properly  left  it  to  them 
to  find  what  the  agreement  between  the  parties  actually  w^as,  and 
the  conclusion  to  be  drawn  from  such  finding.  Defendant's  coun- 
sel requested  the  following  instructions  to  be  given :  "If  the  jury 
find  that  Marvin  sold  meat  to  Cook  and  charged  the  same  to  Cook,, 
and  that  Welch  became  responsible  for  it,  in  order  to  take  the 
promise  out  of  the  Statute  of  Frauds,  and  make  Welch  legally 
liable,  they  nuist  also  find  that  Marvin  thereupon  absolutely  dis- 
charged Cook  from  liability,  and  looked  only  to  Welch  for  pay." 
Other  instructions  havmg  a  similar  tendency  were  requested  to  be 
given.  Tiiese  requests  were  refused,  the  jury  being  merely  in- 
structed that  the  manner  of  keeping  the  account,  and  efforts  to 
collect  from  Cook,  were  facts  capable  of  explanation,  and  might 
be  considered  by  the  jury.  We  are  of  opinion  that  defendant  was 
entitled  to  have  the  jury  instructed  as  requested.  Under  no  theory 
of  this  case  could  Cook  and  Welch  both  be  responsible  to  plaintiff,, 
severally,  at  his  option.  If  Cook  w^as  liable  for  the  meats  fur- 
nished after  the  arrangement  with  Welch  was  made,  then  clearly 
Welch's  liability  could  not  be  an  original  one.  It  is  equally  clear 
that  if  Welch's  promise  was  an  original  promise,  and  the  debt  hiS' 


KIMBALL  VS.   NEWELL.  187 

debt,  then  Cook  could  not  be  lield  balile  thereon.  The  parties 
might  have  made  an  agreement  under  which  they  would  have 
been  jointly  liable,  which  is  not  claimed  in  this  case.  But  they 
could  not,  under  the  circumstances,  be  severally  liable,  at 
plaintiff's  option.  We  know  of  no  better  test  than  this,  in  a  case 
like  the  present.  Brcslcr  v.  Pendell,  12  Mich.  224;  Gihbs  v. 
Blaiichard.  15  Mich.  292;  Corkins  v.  Collins,  16  Mich.  480. 

The  judgment  must  be  reversed,  with  costs,  and  a  new  trial 
ordered. 

The  other  justices  concurred. 


KiMEALL  vs.   Newell    (1845). 
7  Hill  (N.  Y.)  116. 

On  error  from  the  superior  court  of  the  city  of  New  York, 
Newell  brought  an  action  of  covenant  against  Kimball  in  the 
marine  court  of  the  city  of  New  York,  claiming  to  recover  certain 
rent  due  on  a  lease  to  one  Theodosia  Knowlton,  for  whom  the 
defendant  had  become  surety.  On  the  trial,  the  plaintiff  gave  in 
evidence  the  following  instruments : 

"This  is  to  certify  that  I  have  hired  and  taken  from  Daniel  Newell 
the  house  in  Nassau  street,  etc.,  for  one  year,  to  commence  on  the  first 
day  of  May  next,  at  the  yearly  rent  of  four  hundred  and  fifty  dollars, 
payable  quarterly.  And  I  do  hereby  promise  to  make  punctual  payment 
of  the  rent,  in  manner  aforesaid,  and  quit  and  surrender  the  premises, 
at  the  expiration  of  the  term,  in  as  good  state  and  condition  as  reasonable 
use  and  wear  thereof  will  permit,  damages  by  the  elements  excepted. 
Given  under  my  hand  and  seal  the  3rd  day  of  March,   1840. 

Mrs.  T.  Knowlton,  [L.  S.]" 

"In  consideration  of  the  letting  of  the  premises  above  described,  and 
for  the  sum  of  one  dollar,  I  hereby  become  surety  for  the  punctual  pay- 
ment for  the  rent,  and  performance  of  the  covenants,  in  the  above  written 
agreement  mentioned,  to  be  paid  and  performed  by  ]\Irs.  Theodosia  Knowl- 
ton, and  if  any  default  should  be  made  therein,  I  do  hereby  promise  and 
agree  to  pay  unto  the  said  Daniel  Newell  such  sum  or  sums  of  money  as 
will  be  sufficient  to  make  up  such  deficiency,  and  fully  satisfy  the  conditions 
of  the  said  agreement,  without  requiring  any  notice  of  non-payment,  or 
proof  of  demand  being  made.  Given  under  my  hand  and  seal  the  3d  day 
of  March,  1840. 

"M.  T.  C.  KiMP.ALL,  [L.  S.]" 


188  GUARANTY   AND  SURETYSHIP- 

It  appeared  that  Mrs.  Knowlton  occupied  under  the  lease, 
and  that  a  balance  of  rent,  amounting-  to  5>3i.<)4,  remained  due  the 
plaintitf.  It  finthcr  appeared  that  Mrs.  Knowlton  was  a  married 
woman  at  the  time  the  lease  was  executed  ;  and  the  defendant 
contended  that,  inasmuch  as  her  covenant  was  void  by  reason  of 
coverture,  his  was  also  void.  The  marine  court  held  otherwise, 
however,  and  rendered  judgment  in  favor  of  the  plaintiff,  which 
was  afterwards  affirmed  by  the  superior  court  on  certiorari,  and 
the  defendant  brought  error. 

R.   II.   Slianiion.  lor  the  ])laintiff  in  error. 
Howard  &  Oudcrdnnk,  for  the  defendant  in  error. 

Nelson,  Ch.  J.  The  defendant  having  consented  to  become 
bound  as  surety  for  the  rent  of  the  premises  leased  to  Mrs.  Knowl- 
ton. it  is  Init  reasonable  to  presume  that,  if  he  was  not  well 
acquainted  with  her  situation  before,  he  then  made  some  enquiries 
into  her  circumstances  and  condition,  and  thus  1)ecame  fully  pos- 
sessed of  the  facts  which  he  now  sets  up  as  a  ground  of  discharge. 

Hut  conceding  that  the  defendant  had  no  knowledge  of  the 
social  condition  of  Mrs.  Knowlton.  and  that  he  supposed  she  would 
be  legally  holden  for  the  rent  as  it  accrued,  I  am  still  of  the  opin- 
ion that  he  is  liable  on  his  contract.  I'hc  doctrine  for  which  his 
counsel  contends  is  thus  stated  l)y  'rhcol)ald:  "The  obligation  of 
the  surety  being  accessory  to  the  obligation  of  some  person  who  is 
the  principal  debtor,  it  is  of  its  essence  that  there  should  l)e  a  valid 
obligation  of  a  i)rincii)al  debtor.  '\'W  nullity  of  the  principal 
obligation  necessarily  induces  the  nuUit)-  of  the  accessory." 
(Theob.  Prin.  &  Sur.  2. )  This  is  undouljtedly  correct  as  a  general 
rule  ;  but  it  has  its  exceptions,  and  the  case  before  us  is  one  of  them. 

Mr.  Chitty  says :  "The  rule  that  a  ]iarty  can  not  be  liable  upon 
a  contract  of  guarantee,  unless  the  principal  has  incurred  a  legal 
responsibility,  is  true,  in  some  instances,  in  form  or  words,  rather 
than  in  substance."  (Chitty  on  ("ontr..  499.)  He  adds:  "In  the 
-case  of  a  guarantee  to  answer  for  the  i)rice  of  goods  to  be  supplied 
to  a  married  woman,  or  goods  (not  necessaries)  to  be  sold  to  an 
infant,  or  other  persons  incompetent  to  contract,  no  doubt  the 
party  guaranteeing,  though  professedly  contracting  only  in  the 
character  of  surety,  would  be  responsible."  (  Id.)  He  refers  to 
the  case  of  Maggs  v.  Ames  (4  IJing.  470).  which  was  an  action 
against  the  defendant  as  suretv  for  a  married  woman.    There  the 


B.&ajKr'Mvm 


KIMl'-AI.r.  vs.    XKW'FJ.r,. 


189' 


question  was  whether  the  undertaking  of  the  defenciant  was  an 
original  one,  so  as  not  to  require  it  to  be  in  writing.  The  court 
held  that  it  was  collateral,  and  therefore  should  have  been  in  writ- 
ing. But  neither  the  counsel  nor  cotirt  supposed  that  the  defend- 
ant would  not  have  been  bound,  if  the  contract  had  been  in  writing. 
On  the  contrary,  that  was  assumed.  In  the  case  of  Wliitc  v. 
Ciiyler  (6  T.  R.  176),  it  was  impliedly  at  least  conceded  by  Lord 
Kenyon,  that  a  guarantor  or  surety  for  a  feme  covert  wotild  be 
liable  on  his  contract.  (See  also  Chitty  on  Contr.,  515  ;  Pitman  on 
Prin.  and  Surety,  13;  Biickiny)'  v.  Daniall  (2  Ld.  Raym.  1085)  ; 
Harris  v.  Hiincliback  (1  Burr.  373)  ;  Cliapiii  v.  Laphaiii  (20  Pick. 
467). 

The  doctrine  of  the  civil  law  is  very  clear  and  satisfactory  on 
this  subject.  It  is  as  follows :  "Ahhough  the  obligation  of  a  surety 
be  only  an  accessory  to  that  of  the  principal  debtor,  yet  he  who  has 
Ijound  himself  surety  for  a  person  who  may  get  himself  relieved 
from  his  obligation,  such  as  a  minor,  or  a  prodigal  who  is  inter- 
dicted, is  not  discharged  from  his  suretyship  by  the  restitution  of 
the  principal  debtor :  and  the  oblis-ation  subsists  in  his  person ; 
unless  the  restitution  were  grounded  upon  some  fraud,  or  other 
vice  which  would  have  the  efifect  to  annul  the  right  of  the  cred- 
itor." (Dom.  B.  3  tit.  §  I,  art.  10,  Strahan's  ed.)  Again:  If  the 
principal  obligation  was  annulled  only  because  of  some  personal 
exception  which  the  principal  debtor  had,  as  if  it  was  a  minor, 
wdio,  in  consideration  of  his  being  under  age,  got  himself  relieved 
from  an  engagement  by  which  he  suflered  some  prejudice,  and 
that  there  had  been  no  fraud  on  the  creditor's  part ;  the  restitution 
of  the  minor  would  have  indeed  this  effect,  that  it  would  annul 
his  obligation  to  the  creditor,  and  his  engagement  to  save  harmless 
his  surety,  if  he  desired  to  be  relieved  from  it.  But  the  said  resti- 
tution of  the  minor  would  not  in  the  least  invalidate  the  surety's 
obligation  to  the  creditor.  For  it  was  only  to  make  good  the 
obligation  of  the  minor,  in  case  he  should  be  relieved  from  it  on 
account  of  his  age,  that  the  creditor  took  the  additional  security 
of  a  suretv."  ( Id.,  B.  3.  tit.  4,  §  S-  art.  2 ;  and  see  i  Ev.  Poth.  on 
Obi.  237.) 

I  am  satisfied  that  the  decision  of  the  court  below  was  right, 
and  that  the  judgment  should  be  affirmed. 

Be.\rdslev,  J.  I  think  the  defendant  was  estopped  from 
denving  the  competencv  of  Mrs.  Knowlton  to  bind  herself  by  the 
covenant  she  assumed  to  execute.     The  defendant  by  his  covenant 


190  GUARANTV   AND  SURliTVSIIIP. 

admits  she  was  thus  bound,  and  he  shall  not  be  allowed  to  gainsay 
it  by  alleging  her  incapacity  to  make  a  legal  contract.  Had  she 
been  induced  to  enter  into  this  engagement  by  fraud  or  imposition, 
or  upon  a  usurious  consideration,  the  case  might  have  been  other- 
wise ;  but  the  defendant,  although  a  surety,  cannot  be  permitted, 
on  the  ground  now  set  up,  to  deny  the  legal  existence  of  a  covenant 
which  is  explicitly  conceded  by  his  own  deed.  (Co.  Litt.  352,  a, 
note  306;  I  Stark.  Ev.  302,  Am.  ed.  of  1830;  Greenl.  Ev.,  §§  22 
to  26,  and  the  notes.) 

The  judgment  of  the   court  below   is   right,  and   should   be 
affirmed. 

Judgment  affirmed. 


Dexter  z>s.  Blanchard  (1865), 
II  Allen  365. 

Contract  brought  upon  an  oral  promise  by  the  defendant  to 
pay  to  the  plaintiff  a  bill  for  the  hire  of  horses  and  carriages,  and 
for  injury  to  a  wagon. 

At  the  trial  in  the  superior  court,  before  Morton,  J.,  the 
plaintiff"  off'ered  to  prove  that  the  horses  and  carriages  were  hired 
and  the  injury  done  by  the  defendant's  minor  son,  to  whom  the 
credit  therefor  was  given  ;  and  that  not  long  after  the  date  of  the 
last  charge  the  defendant's  son  l)ecame  sick,  and  while  so  sick 
the  plaintiff  several  times  demanded  payment  of  him,  and  there- 
upon the  defendant  verbally  promised  to  pay  the  plaintiff's  bill  if 
the  i)laintiff  would  not  trouble  his  son  any  further;  to  which 
the  plaintiff  agreed.  The  son  afterwards  died.  It  was  admitted 
that  the  bill  was  not  for  necessaries. 

The  judge  ruled  that  upon  these  facts  the  action  could  not 
be  maintained,  and  a  verdict  was  returned  accordingly  for  the 
defendant,     'ihe  plaintiff  alleged  exceptions. 

E.  L.  S hernia II.  for  the  plaintiff. 
//'.  BrigJiaui,  for  the  defendant. 

BiGELOw.  C.  J.  riie  ruling  of  the  court  was  in  accordance 
with    well    established    i)rincii)les.      The    defendant's   promise,   al- 


DEXTER  VS.    P.r.ANCriARO.  19l 

though  it  may  have  been  made  on  a  good  consideration  as  to  the 
plaintiff,  was  nevertheless  a  promise  to  pay  the  debt  of  another, 
and  no  action  can  be  maintained  upon  it.  (icn.  Sts.,  c.  105,  §  i.  The 
fallacy  of  the  argument  urged  in  behalf  of  the  plaintiff  lies  in  the 
assumption  that  there  was  in  fact  no  debt  due  from  the  son  of 
the  defendant,  because  he  was  a  minor  at  the  time  he  undertook 
to  enter  into  a  contract  with  the  plaintiff'.  A  debt  due  from  a 
minor  is  not  void ;  it  is  voidable  only ;  that  is,  it  cannot  be  enforced 
by  a  suit  at  law  against  the  contracting  party,  on  plea  and  proof  by 
him  of  infancy.  But  it  is  voidable  only  at  the  election  of  the 
infant,  and  until  so  avoided  it  is  a  valid  debt.  Nor  can  a  third 
person  avail  himself  of  the  minority  of  a  debtor  to  obtain  any 
right  or  security  or  title.  Infancy  is  a  personal  privilege,  of  which 
no  one  can  take  advantage  but  the  infant.  Kendall  v.  Laivrcnce, 
22  Pick.  540;  Nightingale  v.  IVithington,  15  Mass.  274;  McCarty 
V.  Murray,  3  Gray,  578. 

The  effect  of  the  doctrine  contended  for  by  the  counsel  for  the 
plaintiff  would  be  that  a  verbal  agreement  to  answer  for  the  debt 
of  another  would  be  valid,  if  it  could  be  shown  that  the  original 
contracting  party  could  have  established  a  good  defence  to  the 
debt  in  an  action  brought  against  him.  We  know  of  no  principle  or 
authority  on  which  such  a  proposition  can  be  maintained.  It  cer- 
tainly would  open  a  wide  door  for  some  of  the  mischiefs  which 
the  statute  of  frauds  was  designed  to  prevent. 

The  case  for  the  plaintiff  derives  no  support  from  the  argu- 
ment based  on  proof  of  an  agreement  by  the  plaintiff  to  forbear 
to  sue  the  defendant's  son,  in  consideration  of  the'  promise  of  the 
latter  to  pay  the  debt.  It  is  perfectly  well  settled  that  it  is  not  a 
sufficient  ground  to  prevent  the  operation  of  the  statute  of  frauds, 
that  the  plaintiff  has  relinquished  an  advantage  or  given  up  some 
lien  or  claim  in  consequence  of  the  defendant's  promise,  if  that 
advantage  or  relinquishment  did  not  also  directly  enure  to  the 
benefit  of  the  defendant.  It  is  only  when  such  relinquishment  or 
surrender  operates  to  transfer  to  the  defendant  the  right,  interest 
or  advantage  which  the  plaintiff  gives  up,  or  to  create  in  the 
defendant  some  title  or  benefit  derived  from  that  which 'the  other 
party  surrenders,  that  the  promise  can  be  regarded  as  an  original 
undertaking,  and  not  within  the  statute.  Curtis  v.  Brown,  5  Cush. 
488,  and  cases  cited. 

Exceptions  overruled. 


192  GUAKAXTV   AND   SirKIiTVSlIlP- 

Lee  vs.  Yaxdell,  et  al.  ( 1887), 
69  Tex.  34. 

This  suit  was  l)n)U<;iu  1)_\-  appellant  against  ^'andi'll,  appellee,, 
and  W.  A.  Gray  and  A.  M.  Waklrnp,  on  a  ])r()niiss(irv  note,  joint 
and  several  upon  its  face,  but  which  it  was  alleged  in  the  answer 
that  (jray  and  W'aldrup  signed  as  sureties.  The  answer  alleged 
that  \'andell  was  non  compos  mentis  when  the  note  was  made  and 
that  there  was  no  consideration  therefor. 

Charles  I.  Evans,  for  a])i)ellant. 
IV.  H.  Cowan,  for  appellees. 

MALTiiiE,  J.     The  third  charge  is  as  follows: 

"If  yon  find  from  the  evidence  that  the  defendant,  Yandell, 
at  the  time  he  signed  the  note  sued  on,  was  of  unsound  mind  to 
such  an  extent  as  to  be  unable  to  comprehend  the  nature,  meaning 
and  effect  of  his  act  in  signing  such  note,  you  will  return  a  verdict 
for  defendants." 

This  was  also  assigned  as  error ;  and,  being  the  only  instruc- 
tion given  in  reference  to  Yandell's  sanity,  it  should  be  considered 
in  the  light  of  all  the  facts  proven  on  the  trial  in  reference  to  that 
subject.  While  it  must  be  regarded  as  an  imperfect  presentation 
of  the  law  of  the  case,  as  a  general  proposition  it  can  not  be  said 
to  be  incorrect ;  and  the  plaintiff'  not  having  called  the  attention  of 
the  court  to  other  ])hases  of  the  c[uestion  by  asking  api)ropriate  in- 
.Mructions,  ordinarily  there  would  not  be  error  in  the  omission. 
{farqiihar  v.  Dallas,  20  Texas,  200;  Calloglicr  v.  Boicic,  66  Texas, 
265.)  In  this  case,  however,  two  other  persons  signed  said  note  as 
sureties,  and,  under  the  charge,  the  jury  found  in  favor  of  said 
sureties  as  well  as  the  principal,  Yandell. 

As  a  general  proposition,  whenever  a  jirincipal  on  a  note  is 
discharged,  his  sureties  will  be  also;  but  to  this  rule  there  are  cer- 
tain well  established  exceptions.  For  instance,  the  note  of  a  mar- 
ried woman  is  generally  held  to  be  void;  but  if  jiersons.  not  them- 
selves under  disability,  sign  the  note  of  a  married  woman,  without 
the  payee  having  been  guilty  of  fraud  or  deceit  in  procuring  the 
signature  of  such  married  woman,  the  sureties  w'ould  be  liable 
though  the  i)rinci])al  be  discharged.  ( 2  Daniel  on  Neg.  Inst.,  par. 
1306a;  Daz'is  V.  Staaf^s,  43  Ind.  103;  Allen  v.  Bcrryhill,  27  Iowa 
531  ;  I  licks  v.  KandolpJh  3  Baxter  352.^ 


RUSSKLI.   VS.    ANNABl.E.  193 

The  same  principle  has  hecn  extended  U)  sureties  on  notes  ex- 
ecuted by  infants ;  and  it  is  beheved  that  no  vahd  reason  can  be 
given  why  sureties  of  a  person  of  unsound  mind  should  not  be  held 
liable  under  like  circumstances,  though  the  principal  be  discharged, 
especially  so,  when  the  payee  of  the  note  is  ignorant  of  the  fact 
that  the  principal  is  a  lunatic ;  as  in  such  case  a  recovery  might  be 
had  even  against  the  lunatic,  if  the  payee  acted  in  good  faith. 
( Pomeroy's  Equity,  volume  2,  page  946. )  The  contract  of  a  surety 
is,  that  if  the  principal  does  not  pay,  he  will,  and  sound  policy  as 
well  as  the  plainest  principles  of  justice  demand,  that  when  there 
is  a  valid  consideration,  and  the  payee  has  done  nothing  to  deceive 
or  mislead  either  principal  or  surety,  and  the  principal  is  held  to  be- 
not  liable,  on  account  of  some  disability  existing  at  the  time  of  the 
making  of  the  contract,  whether  such  disability  be  coverture,  in- 
fancy or  unsoundness  of  mind,  the  surety  should  be  held  to  the 
terms  of  his  contract.  The  reason  given  in  some  of  the  cases  why 
the  surety  of  a  married  woman  is  held,  is  that  the  payee  and  the 
surety  knew-  at  the  time  that  the  contract  was  made  that  the  mar- 
ried woman  might  refuse  to  pay,  or  that  the  contract  was  made  in 
reference  thereto,  the  surety  binding  himself  to  pay  in  case  she 
should  avail  herself  of  her  legal  rights.  In  case  of  a  lunatic  ii 
might  be  presumed  that  if  the  payee  knew  of  the  disability,  the 
sureties  being  his  close  friends,  would  also  know  of  it,  and  that 
the  contract  was  made  in  reference  to  that  state  of  facts.  There 
was  no  evidence  that  Lee  had  in  any  manner  deceived,  overreached 
or  defrauded  Yandell  in  procuring  him  to  sign  the  note.  Hence 
we  are  of  opinion  that  the  charge  of  the  court  should  have  been 
limited  to  Yandell,  and  the  question  submitted  as  to  the  liabilities 
of  the  sureties  on  the  principles  herein  enunciated. 

Reversed  and  remanded. 

Opinion  adopted  November  i,  1887.^ 


Russell  vs.  Annable   (1871). 
109  Mass.  72. 

Contract,  brought  August  3,  1870,  against  one  of  the  sure- 
ties in  the  following  bond  given  under  the  Gen.  Sts.  c.  123,  §104,. 
to  dissolve  an  attachment : 


^The   opinion   on   other   questions   is   omitted. 
14 


194  GUARANTY   AND  SURETYSHIP- 

"Know  all  men  by  these  presents,  that  F.rastus  Dennett  and  Chas.  R. 
Pottle,  of  Boston  in  the  county  of  Suffolk,  as  principal,  and  George  M. 
Stevens,  of  Cambridge,  and  John  F.  Annablc,  of  Somcrville,  in  the  county 
of  Middlesex,  as  surety,  are  holden  and  stand  firmly  bound  and  obliged 
unto  Arthur  W.  Russell,  of  Cambridge  in  said  Middlesex,  in  the  full  and 
just  sum  of  two  hundred  dollars,  to  be  paid  unto  the  said  Russell,  his 
executors,  administrators  or  assigns,  to  which  payment,  well  and  truly 
to  be  made,  we  bind  ourselves,  our  heirs,  executors  and  administrators, 
jointly  and  severally,  firmly  by  these  presents,  sealed  with  our  seals,  dated 
the  twenty-second  day  of  July  in  the  year  of  cur  Lord  one  thousand  eight 
hundred  and  sixty-nine.  l"he  condition  of  this  obligation  is  such,  that, 
whereas  the  said  Russell  has  caused  the  goods  and  estate  of  said  Dennett 
&  I'ottle,  to  the  value  of  two  hundred  dollars,  to  be  attached  on  mense 
process  in  a  civil  action,  by  virtue  of  a  writ  bearing  date  the  2ist  day  of 
July,  A.  D.  1869,  and  returnable  to  the  superior  court  for  civil  business 
to  be  holden  at  said  Boston  within  and  for  the  county  of  Suffolk  on  the 
first  Tuesday  of  October  next,  in  which  said  writ  the  said  Arthur  W. 
Russell  is  plaintiff,  and  the  said  Erastus  Dennett  and  Charles  R.  Pottle  the 
defendants,  and  whereas  the  said  defendants  wish  to  dissolve  the  said 
attachment  according  to  the  provisions  of  the  General  Statutes  in  such 
cases  made  and  provided ;  Now,  therefore,  if  the  above  bounden  Russell 
shall  pay  to  the  plaintiff  in  said  action  the  amount,  if  any,  whidi  he  shall 
recover  therein,  within  thirty  days  after  the  final  judgment  in  said  action, 
then  the  above  written  obligation  shall  be  null  and  void,  otherwise  to 
remain  in   full   force  and  virtue. 

"Dennett  &   Pottle,      [seal] 
"George  M.  Stevens,     [seal] 
"John  F.  Annable,       [seal]" 
"Signed,  sealed  and  delivered 
in  presence  of 

"Edward  Raymond." 

Tlie  declaration  alieg-ed  that  the  plaintiff  at  said  October  term 
1869  of  the  stipcrior  court  duly  entered  the  action  named  in  the 
bond,  and  such  proceedings  were  had  therein  that  he  obtained 
judgment  against  said  Dennett  &  Pottle  at  April  term  1870  for 
$110  damages  and  $21.49  costs,  and  no  part  of  said  judgment 
had  been  paid,  though  the  defendant  had  often  been  requested  to 
pay  the  same,  and  the  defendant  owed  him  the  amount  of  said 
judgment  and  the  costs  subsequently  accrued  thereon.  The  an- 
swer denied  each  and  every  allegation  of  the  plaintiff. 

Trial  in  the  superior  court  lie  fore  Scudder,  J.,  who  l)v  con- 
sent of  the  parties  reported  the  following  case  before  verdict  : 
"This  w'as  an  action  on  a  bond,  of  which  a  copy  is  annexed.  It 
appeared  that  Erastus  Dennett  and  Charles  R.  Pottle  were  co- 
jxu'tners,  under  the  hrm  name  of  Dennett  &  Pottle,  and  that  the 


RUSSELL  VS.    ANN  ABLE.  195 

execution  of  the  bond,  as  to  the  principal,  was  by  one  of  them. 
It  was  contended  by  the  defendant  that  the  bond  was  void  upon 
its  face ;  also  that  there  was  no  legal  execution  of  it  by  the  prin- 
cipals, and  therefore  it  was  void  as  to  the  defendant.  If  these 
objections  are  valid,  then  judgment  is  to  be  for  the  defendant;  if 
invalid,  then  judgment  for  the  plaintifif,  $138.83,  with  interest 
from  June  24,  1870,  being  the  date  of  original  judgment  and 
costs.  The  officer's  return  on  the  original  writ  and  judgment 
may  be  referred  to.  The  execution  of  the  bond  by  the  defend- 
ant was  admitted."  The  return  of  the  officer  thus  referred  to, 
certified  that  the  property  attached  by  him  for  dissolution  of  which 
attachment  the  bond  was  given,  was  property  of  Dennett  &  Pottle, 
and  that  he  took  the  bond  '"of  said  Dennett  &  Pottle,  with  George 
M.  Stevens  and  John  F.  Annable  as  sureties." 

/.  5.  Abbott,  for  the  plaintiff. 
C.  C.  Read,  for  the  defendant. 

Ames,  J.  It  is  well  settled  that  one  partner  cannot  bind  his 
associates  by  affixing  his  signature,  in  the  name  and  style  of  the 
firm,  to  an  instrument  under  seal.  To  make  such  a  transaction 
binding  it  must  appear  that  there  was  either  a  previous  authority, 
or  a  subsequent  ratification  on  the  part  of  the  other  partners, 
adopting  the  signature  as  binding  upon  them.  Cady  v.  Shepard, 
II  Pick.  400;  Van  Deusen  v.  Bhtiit,  i8  Pick.  229;  Swan  v.  Sted- 
nian,  4  Met.  548;  Dillon  v.  Broivn,  \i  Gray,  179.  The  report  in 
this  case  presents  no  evidence  of  any  previous  authority  or  sub- 
sequent ratification,  and  it  follows  that  the  bond  is  not  so  exe- 
cuted as  to  bind  the  members  of  the  firm. 

The  bond  purports  to  be  the  joint  and  several  contract  of  cer- 
tain persons  named  therein  as  principals,  and  the  defendant  and 
George  M.  Stevens  as  sureties.  The  defendant's  undertaking  is 
only  that  the  principal  obligors  shall  fulfill  the  obligation  which 
by  the  terms  of  the  bond  they  have  assumed.  But  if  the  bond 
was  not  binding  upon  both  Dennett  and  Pottle,  (as  it  was  not, 
for  want  of  due  and  proper  execution  of  the  instrument  on  their 
part,)  they  assumed  no  obligation,  and  it  was  not  binding  upon 
the  sureties.  It  was  essential  to  the  bond  that  the  principals 
should  be  parties  to  it ;  it  is  recited  that  they  are  so,  and  the 
instrument  is  incomplete  and  void  without  their  signature.  The 
remedy  of  sureties  against  their  principals  might  be  greatly  em- 


196  GUARAXTV   AXn   SURETYSHIP- 

barrassed,  if  such  an  in.slrunK'iU  as  this  should  he  held  hinding. 
There  is  nothing  to  estop  any  member  of  the  firm,  who  did  not 
sign  it,  from  denying  that  he  was  a  party  to  it,  and  it  was  no 
part  of  the  defendant's  contract  that  he  should  be  surety  for  one 
member  of  the  firm,  and  not  for  both.  The  instrument  is  incom- 
plete without  the  signature  of  each  partner,  or  proof  that  the  sig- 
nature affixed  had  the  assent  and  sanction  of  each  of  them.  The 
sureties  on  a  bond  are  not  holden,  if  the  instrument  is  not  executed 
by  the  person  wdiose  name  is  stated  as  the  principal  therein.  It 
should  be  executed  by  all  the  intended  parties.  Bctni  v.  Parker, 
\y  Alass.  591  ;  Wood  v.  Washburn,  2  Pick.  24. 

The  instrument,  being  found  incapable  of  taking  effect  as 
a  specialty,  cannot  operate  as  a  simple  contract.  Cases  have  in- 
deed arisen,  in  which  a  bond,  duly  executed,  expressing  a  contract 
which  the  parties  had  a  right  to  make,  has  been  held  to  be  valid 
at  common  law,  although  not  made  with  the  fonnalities,  or  exe- 
cuted in  the  mode,  provided  by  a  statute  under  which  it  purports  to 
have  been  given.  See  Sii'eetscr  v.  Hay,  2  Gray,  49,  aufl  cases  there 
there  cited.  But  we  find  no  case  in  which  it  has  been  held  that  a 
written  instrument,  purporting  to  be  a  specialty,  and  plainly  in- 
tended by  the  parties  to  have  all  the  incidents  and  characteristics  of 
a  bond  in  the  strict  and  technical  sense  of  that  word,  has  ever  been 
transmuted  by  the  court  into  a  simple  contract,  for  the  reason  that 
it  has  not  been  properly  executed  to  take  effect  as  a  contract  under 
seal. 

It  is  therefore  held  by  a  majority  of  the  court,  that  there 
should  be  judgment  for  the  defendant. 

Note. — The  dissentinR  opinion  of  Wells,  J.,  is  omitted. 


Weare  ?y.y.  Sawyer  (1862). 
44  N.  H.  198. 

Assumpsit  upon  a  promissory  note  of  which  the  following  is 
a  copy:   {Weave  v.  School  District,  44  N.  H.  189.) 

"$725- 

Weake,  Nov  10,  1855. 

For    value    received,    \vc,    John    Jepson.    prudential    committee,    and 

Paige  E.  Gove,  clerk  of  School  Di'^trict  No.   16  in  Weare,  dulv  authorized 


VVEARE  VS.   SAWYEK.  197 

to  hire  money  in  the  name  of  said  district,  for  the  purpose  of  building  a 
schoolhouse,  and  John  W.  Chase,  Moses  Sawyer,  Allen  Sawyer,  Daniel 
Sawyer,  Peter  C.  Gove,  L.  W.  Gove,  Lewis  Greenleaf,  J.  P.  Adams,  Amos 
Chase,  M.  F.  Currier,  D.  G.  Chase,  A.  H.  Emerson,  and  D.  S.  Stanley,  as 
sureties,  jointly  and  severally  promise  to  pay  the  town  of  Weare,  or  order, 
sevfn  hundred  and  twenty-five  dollars,  on  demand,  with  interest  annually, 
it  being  a  part  of  the  ministerial  fund  belonging  to  said  town  of  Weare, 
now  in  the  hands  of  Hiram  Simonds,  to  take  care  of  said  fund  in  behalf 
of  the  town. 

John  Jepson,  Prudential  Committee. 

Paige  E.  Gove,  Clerk. 

John  W.  Chase  (and  others),  sureties." 

Morrison,  Stanley  &  Clark,  for  defendant. 

Fowler  &  Chandler,  on  same  side. 

/.  W.  Smith,  for  plaintiffs.     Perley,  on  same  side. 

Bellows,  J.  It  has  already  been  decided,  in  Weare  v.  School 
District,  and  Weare  v.  Gove,  reported  in  this  volume,  that  the  vote 
to  borrow  money  was  not  passed  at  a  meeting  duly  called  for  that 
purpose;  and,  therefore,  as  the  agents  of  the  district  had  no  au- 
thority to  put  its  name  to  the  note,  they  are  themselves  bound; 
and  the  remaining  ground  of  defense  proposed  to  be  set  up  is,  in 
substance,  that  at  the  time  of  the  making  of  the  note  it  was  agreed 
that  the  defendants"  undertaking  should  extend  no  farther  than 
to  insure  the  performance  of  such  contract  as  had  been  legally 
entered  into  by  the  school  district,  whereas  the  defendants'  con- 
tract to  pay  the  money  is  on  its  face  absolute. 

The  general  rule  would,  undoubtedly,  exclude  such  parol 
evidence ;  and  we  are  not  aware  of  any  exception  by  which  it 
could  be  admitted. 

It  is  true  that  parol  evidence  may  be  received  to  prove  that 
one  of  the  makers  is  but  a  surety;  although  nothing  of  the  kindi 
appears  upon  the  face  of  the  instrument.  Bank  v.  Kent,  4  N.  H. 
221.  This,  however,  is  not  for  the  purpose  of  varying  the  obli- 
gation as  originally  entered  into,  but  is  admitted  in  connection 
with  proof  of  indulgence  to  the  principal,  to  show  a  subsequent 
discharge  of  such  surety,  by  substituting  a  new  contract,  to  which 
he  was  no  party. 

The  case  of  Hoyt  v.  French,  24  N.  H.  198,  is  in  point.  There 
it  was  proposed  to  show  by  parol  that  when  the  surety  signed  the 
note  it   was  agreed  that  the   first  money   paid  by   the   principal 


198  GUARANTY   AND   SURETYSHIP- 

should  l)c  applied  thereon,  and  ilial  money  had  been  so  ])aid.  ])Ut 
not  applied ;  and  it  was  held  that  the  evidence  was  not  admissil)le, 
as  the  effect  W'Ould  be  to  vary  the  terms  of  the  note.  Of  the  same 
character  is  Lang  v.  Johnson,  24  N.  H.  302. 

It  is  said,  also,  that  the  liability  of  the  surety  is  coextensive 
only  with  that  of  the  principal,  and  that  the  school  district  must 
be  regarded  as  the  principal  here.  As  a  general  proposition  it 
may  be  true  that,  in  the  contract  of  guaranty,  there  must  be  a 
principal  who  is  also  liable.  It  would  be  true  in  all  cases  where 
the  guarantor  stipulated  to  guaranty  the  performance  of  the  prin- 
cipal's engagement. 

But  in  that  large  class  of  cases  where  the  contract  is  to  pay 
a  "specific  sum  of  money,  there,  we  apprehend,  the  guarantor  or 
surety  is,  in  the  absence  of  fraud,  bound  by  the  terms  of  his 
contract,  although  his  principal,  by  reason  of  coverture,  infancy, 
or  w-ant  of  authority  in  the  person  assuming  to  act  for  him,  is 
not  bound. 

So  it  is  laid  down  (Chit,  on  Cont.,  9  Am.  Ed.  441)  in  respect 
to  infants,  married  women,  and  other  persons  incompetent  to 
contract ;  and  we  see  no  reason  why  the  same  doctrine  does  not 
apply  to  the  case  of  a  want  of  authority.  In  fact  it  appears  to 
have  been  so  applied  in  tlie  case  of  a  surety  for  a  partnership, 
wdiere  the  name  of  the  firm  was  affixed  to  the  note  without  au- 
thority. Stezvart  v.  Bochm,  2  Watts,  356;  3.  U.  S.  Dig.  496, 
sec.  154. 

The  same  principle  is  recognized  in  Conn  v.  Cohurn,  7  N.  H. 
368-373,  where  a  surety  for  an  infant  upon  a  promissory  note, 
given  for  necessaries,  having  paid  the  note,  was  permitted  to  re- 
cover the  amount  of  the  infant;  Parker,  J.,  holding,  that  as  the 
surety  was  bound,  as  the  debtor,  to  pay  the  note,  he  had  a  right 
to  do  so,  and  call  upon  the  infant.  Such,  also,  is  the  doctrine  of 
St.  Albans  Bank  v.  Dillon,  30  Vt.  122,  where  the  principal  was 
a  married  woman.     Pars,  on  Cont.  194. 

Beside,  in  the  case  before  us,  the  agents,  who  used  the  name 
of  the  district  without  authority,  are  themselves  bound  as  prin- 
cipals, and  it  is  not  competent  to  show  as  a  defense  that  the  sure- 
ties supposed  the  district  to  be  the  principal.  Had  they  been 
misled  by  fraudulent  representations  of  the  town,  a  remedy  might 
be  found  for  them ;  but  as  the  case  stands,  they,  acting  upon  their 
own  understanding  of  the  law  and  the  facts,  have  promised  to  pay 
the  sum  loaned,  and  we  tliink  thev  are  l)0und  by  it. 


HAZARD  VS.   GRTSWOLD.  199 

It  is  sugg-ested,  also,  that,  in  case  of  a  mistake  in  this  respect, 
it  may  be  shown  and  corrected,  but  we  think  it  can  not  be  done 
in  this  form,  but  only  by  bill  in  equity. 

In  accordance  with  the  agreement  of  the  parties,  there  must 
therefore  be 

Judgment  for  the  plaintiffs. 


Hazard  et  al.  vs.  Griswold  (1884), 
21  Fed.  178. 

Action  of  Debt  on  Bond. 

Edzvin  Mctcalf,  for  plaintiffs. 

Smnl  R.  Honey  and  Arnold  Greene,  for  defendant. 

Before  Gray  and  Colt.  J.  J. 

Gray,  Justice.  This  is  an  action  of  debt,  commenced  in  the 
Supreme  Court  of  the  State  of  Rhode  Island,  on  March  3,  1883, 
by  four  citizens  of  Rhode  Island  against  a  citizen  of  New  York,  on 
a  bond  dated  August  24,  1868,  and  executed  by  Thomas  C.  Durant 
as  principal,  and  the  defendant  and  S.  Dexter  Bradford  as  sure- 
ties, binding  them  jointly  and  severally  tc  the  plaintiffs  in  the  sum 
of  $53,735,  the  condition  of  which  is  that  Durant  ''shall  on  his  part 
abide  and  perform  the  orders  and  decrees  of  the  Supreme  Court  of 
the  State  of  Rhode  Island  in  the  suit  in  equity  of  Isaac  P.  Hazard 
and  others  against  Thomas  C.  Durant  and  others,  now  pending 
in  said  court  within  and  for  the  county  of  Newport." 

The  breach  assigned  in  the  declaration  is  that  Durant  has  not 
performed  a  decree  by  which  that  court,  on  December  2,  1882, 
ordered  him  to  pay  into  its  registry  the  sum  of  $16,071,659.97. 
(That  part  of  the  opinion  preceding  consideration  of  fifth  plea 
is  omitted.) 

The  fifth  plea  alleges  that  Durant,  at  the  time  and  place  of 
the  making  of  the  supposed  writing  obligatory,  "was  unlawfully 
imprisoned  by  the  said  plaintiff's  and  others  in  collusion  with  them, 
and  then  and  there  detained  in  prison,  until,  by  the  force  and 
duress  of  imprisonment  of  him,  the  said  Thomas  C.  Durant,  he, 
with  the  said  defendant  as  surety,  made  the  said  writing,  signed 
and  sealed  and  delivered  the  same  to  the  said  plaintiffs  as  their 


200  GUARANTY   AND   SURETYSIITP 

deed."  To  this  plea  the  plaintiffs  have  demurred,  hecause  it  does 
not  allege  that  the  writing  was  executed  hy  the  defendant  under 
force  and  duress  of  imprisonnieni  of  himself,  n(ir  ilial  he  did  not 
voluntarily  execute  it  as  surety  with  knowledge  that  it  was  exe- 
cuted l)y  Durant  as  ])rincipal  under  \n\w  and  duress  of  imprison- 
ment, as  alleged  in  the  j)lea.  This  plea  does  not  set  forth  facts 
enough  to  make  out  a  defense.  Duress  at  common  law.  where  no 
statute  is  violated,  is  a  personal  defense,  which  can  only  he  set  up 
by  the  person  subjected  to  the  duress;  and  duress  to  the  principal 
will  not  avoid  the  obligation  of  a  surety ;  at  least,  unless  the  surety, 
at  the  time  of  executing  the  obligation,  is  ignorant  of  the  circum- 
stances which  render  it  voidable  by  the  principal.  Thoinpsoji  v. 
Lockivood,  15  Johns.  256;  Fisher  v.  Shattuck,  17  Pick.  252; 
Robinson  v.  Gonid,  11  C'ush.  55;  Boivnian  v.  Miller,  130  Mass. 
153;  Harris  v.  Cannoiiy,  131  Mass.  51;  GrifHth  v.  Sit  greaves,  90 
Pa.  St.  161.  The  case  of  Hazces  v.  Marchaitt.  i  Curtis  136,  in 
this  court,  was  not  a  case  of  duress  at  common  law,  but  of  oppres- 
sion by  the  illegal  exercise  of  official  power  in  excess  of  statute 
authority,  and  was  decided  upon  that  ground.^ 
Demurrers  sustained. 


EisiN<]  7X  Andrews  (1895), 
'    ■  66  Conn.  58:  50  Am.  St.  R.,  75;  33  Atl.  585. 

Action  on  a  bond  given  by  the  deft-ndant's  testator  as  surety, 
brought  to  the  Superior  Court  in  Fairfield  county  and  tried  to  the 
court,  Thayer,  J.;  facts  found  and  judgment  rendered  from  the 
plaintiff,  and  appeal  b\  tin-  defendant  for  alleged  errors  of  the 
court.     No  error. 

The  case  is  sufficiently  slated  in  the  (i])inion. 

Hoivard  B.  Scott,  f-jr  the  a]i])ellant  (  defen.dant ) . 

Lyman   D.    Brezcster  and   John    U.   Perry,   for   the   appellee 
(plaintiff). 

Axi:)REW'S,  C.  j.  Tlic  plaintifi'  is  tlie  only  living  partner  of  the 
late  firm  of  E.  Rising  &  Co.    The  defendant  is  the  sole  surviving 


'The  remainder  of  the  opinion  is  oniitted. 


RISING    VS.    ANDREWS. 


201 


executor-  of  the  will  of  Thomas  F.  Fay,  late  of  Danbury.  deceased. 
In  his  lifetime.  Fay  had  become  obligated  in  a  bond  as  surety  for 
one  Thomas  F.  Rowan,  as  principal,  Ujv  which  he  bound  himself, 
his  heirs,  executors  and  administrators,  jointly  and  severally  with 
the  said  Rowan,  in  the  ])enal  sum  of  two  thousand  dollars  to  the 
said  E.  Eising-  &  Co.,  conditioned  that  the  said  Rowan,  who  had 
been  employed  by  the  said  firm  as  salesman  and  collector,  •'shall 
well  and  faithfully  discharge  his  duties  as  such  collector  and  agent, 
and  shall  also  account  for  all  moneys,  property  and  other  things 
which  may  come  into  his  possession  or  control  by  reason  of  his 
appointment  and  employment  as  such  agent  and  collector."  Fay 
died  on  the  25th  day  of  June,  1892.  On  the  fifth  day  of  July  next 
thereafter,  the  Court  of  Probate  for  the  District  of  Danbury  lim- 
ited and  allowed  six  months  from  said  date  for  the  presentation  of 
claims  against  his  estate.  After  Fay's  death,  and  between  June 
25th,  1892,  and  August  26th.  1893,  Rowan  received  as  such  col- 
lector and  agent  from  the  customers  of  E.  Eising  &  Co.  more  than 
two  thousand  dollars  of  money  which  belonged  to  the  plaintiff,  but 
which  he  appropriated  to  his  own  use — of  which  amount  the  sum 
ot  $739.41  was  misappropriated  by  Rowan  after  May  26th,  1893. 
This  defalcation  of  Rowan  was  by  him  fraudulently  concealed  from 
the  plaintiff,  and  was  not  discovered  by  the  plaintiff  until  the  first 
day  of  September,  1893.  He  then  made  demand  of  Rowan  that 
he' should  account  for  and  pay  over  to  the  plaintiff  the  said  amount 
which  he  had  misappropriated,  but  Rowan  has  at  all  times  neg- 
lected and  refused  so  to  do.  He  was  then  and  at  all  times  since 
continues  to  be  wholly  insolvent. 

The  plaintiff"  notified  the  defendant  of  such  defalcation  on  the 
26th  day  of  September,  1893,  and  presented  to  him,  as  such  ex- 
ecutor, the  claim  of  said  partnership  on  said  bond ;  and  on  the  i8th 
day  of  November,  1893,  made  demand  on  him  for  the  amount  of 
the  said  bond,  but  the  defendant  refused  to  pay  it.  This  suit  was 
brought  on  the  21st  day  of  November,  1893. 

The  defendant  claimed  as  matter  of  law,  that  upon  these 
facts  the  plaintiff  was  barred  by  the  statute  of  limitations  from  re- 
covering in  this  action  for  any  sums  of  money  misappropriated  by 
Rowan  prior  to  May  26th,  1893.  And  that  the  fraudulent  conceal- 
ment by  Rowan  of  his  misappropriation  did  not  prevent  the  statute 
of  limitations  from  running  in  favor  of  the  defendant,  nor  postpone 
the  time  of  the  arising  of  the  cause  of  action  upon  the  tond  until 
the  plaintiff  discovered  the  misappropriation.    The  court  did  not  so 


202 


GUARANTY   A\D   SUKirrVSIIIP 


hold,  but  rendered  judgment  for  the  plaintiff  for  the  amount  of 
the  bond  widi  interest  from  the  date  of  the  demand.  The  defend- 
ant appealed  to  this  court. 

The  bond  on  which  this  suit  is  brought  contains  two  condi- 
tions: first,  that  Rowan  should  faithfully  discharge  his  duty  as 
agent  and  collector  for  the  said  co-partnership ;  and  second,  that  he 
should  account  for  all  moneys,  property,  or  other  thing  that  should 
come  into  his  hands,  possession,  or  control,  by  reason  of  his  em- 
ployment as  such  agent  and  collector.  A  breach  of  each  of  these 
conditions  is  alleged  in  the  complaint,  and  the  facts  found  by  the 
court  show  that  each  had  been  broken  by  Rowan. 

Section  581  of  the  General  Statutes — being  a  statute  concern- 
ing the  estates  of  deceased  persons — provides  that  "when  a  right 
of  action  shall  accrue  after  the  death  of  the  deceased,  it  shall  be  ex- 
hibited within  four  months  after  such  right  of  action  shall  accrue" ; 
and  that  unless  exhibited  within  such  time  the  creditor  shall  be 
forever  debarred  of  all  right  to  recover  the  claim. 

The  breach  of  the  second  condition  named  in  the  bond'  took 
place,  and  the  right  of  action  thereon  accrued,  not  earlier  than  the 
first  of  September,  1893,  and  within  four  months  next  before  the 
claim  was  exhibited  to  the  defendant.  The  Superior  Court  might 
well  have  rendered  its  judgment  entirely  on  the  breach  of  that 
condition  in  the  bond.  McKliii  v.  Glover,  161  Mass.  418.  And 
there  is  nothing  in  the  case  to  show  that  it  did  not.  Counsel  for 
the  defendant  does  not  dwell  on  this  part  of  the  case. 

Under  the  statute  above  recited  the  defendant  admits  that  the 
plaintiff  is  entitled  to  recover  the  sum  of  $739.41.  that  being  the 
amount  of  money  misa]~)propriated  by  Rowan  within  the  four 
months  next  before  the  claim  was  exhibited  to  him.  And  he  in- 
sists that  because  of  that  statute  the  plaintiff  cannot  recover  for 
any  moneys  wrongfulh'  appropriated  by  Rowan  prior  to  the  said 
four  months.  If  that  statute  stood  alone  it  is  more  than  likely  that 
this  action  would  never  have  been  contested.  It  is  another  statute 
which  causes  the  dispute.  Section  1389  enacts  that:  "If  any  per- 
son, liable  to  an  action  by  another,  shall  fratidulently  conceal  from 
him  the  existence  of  the  cause  of  such  action,  said  cause  of  action 
shall  be  deemecl  to  accrue  against  said  person  so  lial)lc  therefor, 
at  the  time  when  the  person  entitled  to  sue  thereon  shall  first  dis- 
cover its  existence."  Applied  to  a  cause  of  action,  the  term  to 
accrue  means  to  arrive:  to  commence;  to  come  into  existence;  to 
become  a  present  enforcible  demand.    And  the  true  meaning  of  this  ■ 


RISING    VS.    ANDREWS. 


203^ 


statute  is,  that  in  cases  to  which  it  is  apphcable,  the  cause  of  action 
does  not  come  into  existence  until  it  is  discovered  by  the  person 
entitled  to  sue  diereon.  The  effect  of  this  statute  upon  the  present 
case  is  that  no  cause  of  action  came  into  existence  by  reason  of 
Rowan's  defalcation  until  it  was  discovered  by  the  plaintiff". 

It  is  admitted  by  the  defendant  that  this  is  the  effect  of  the 
statute,  if  limited  to  Rowan  himself.  But  the  defendant  says  that 
the  fraudulent  concealment  by  Rowan  does  not  prevent  the  accru- 
ing of  a  cause  of  action  against  him,  the  defendant.  He  says  that 
fraudulent  concealment  of  a  cause  of  action  prevents  the  running 
of  the  statute  of  limitations  only  in  favor  of  the  very  party  who 
commits  the  fraudulent  concealment.  He  cites  Wood  on  Limita- 
tions (2d  Ed.),  page  139,  and  the  cases  there  referred  to,  as  author- 
ity. Stated  in  somewhat  different  language  the  claim  of  the  de- 
fendant is,  that  although  the  accruing  of  a  cause  of  action  was  by 
reason  of  the  last  quoted  statute  suspended,  as  against  Rowan,  until 
the  defalcation  was  discovered,  yet  the  accruing  of  a  cause  of  action 
was  not  suspended  against  this  defendant;  that  as  against  him,, 
this  defendant,  the  cause  of  action  arose  when  Rowan  committed 
the  defalcation ;  and  as  it  appears  by  the  case  that  all  of  the  defal- 
cation, except  the  sum  of  $739.41,  was  committed  more  than  four 
months  before  tlie  claim  was  exhibited  to  him,  he  cannot  be  made 
liable  for  that  part. 

It  seems  to  us  that  there  is  a  fallacy — or  rather  it  is  a  fatal 
error — in  this  argument.  It  conflicts  with  the  most  essential  fea- 
ture of  the  law  relating  to  surety  and  principal.  The  plaintiff  seeks 
to  recover  damages  on  account  of  the  defalcation  of  Rowan.  The 
argument  of  the  defendant  assumes  that  a  cause  of  action  for  such 
defalcation  could  exist  against  him  before  any  cause  of  action 
therefor  against  Rowan  had  accrued.  But  the  law  relating  to 
principal  and  surety  forbids  this.  The  rule  is  that  a  cause  of 
action  cannot  exist  against  a  surety,  as  such,  unless  a  cause  of 
action  exists  against  his  principal.  Ordinarily  the  liability  of  such 
a  surety  is  measured  precisely  by  the  liability  of  the  principal. 
Brandt  on  Suretyship,  §  121  :  Scarcr  v.  Young,  16  Vt.  658;  Boone 
County  V.  Jones,  54  Iowa  709 ;  Patterson's  Appeal,  48  Pa.  St.  345  ; 
McCcihe  V.  Raney,  32  Ind.  309.  So  long  as  no  cause  of  action  ex- 
isted against  Rowan,  the  principal,  no  cause  of  action  existed 
against  the  defendant  or  his  surety.  And  the  statute  of  limitations 
does  not  begin  to  run  in  favor  of  any  person,  until  there  is  a  cause 
of  action.    The  obligation  of  a  surety  is  an  obligation,  accessor}'  to 


204  GL'ARAXTV   AND   SURETYSHIP- 

that  of  a  principal  debtor,  and  it  is  of  the  essence  of  this  olihj^ation 
that  there  should  be  a  valid  obligation  of  some  principal.  Thus, 
where  one  agrees  to  become  responsil)k'  for  another  the  former 
incurs  no  obligation  as  surety,  if  no  valid  claim  ever  arises  against 
the  principal.  Chitty  on  Contracts  (  i  ith  Ed.),  788.  If  the  pnn- 
cipal  is  not  holden,  neither  is  the  surety ;  for  there  can  be  no  acces- 
.sory  if  there  is  no  principal.  De  Colyar  on  Principal  and  Surety, 
Amer.  Ed.  39;  Addison  on  (Jontracts,  §  11 1 1.  The  existence  of  a 
principal  debtor  is  a  condition  precedent  to  the  operation  of  the 
.contract  of  a  surety.  Ihtcard  v.  Inciii,  18  Pick.  95  ;  S^cift  v.  Beers, 
3  Denio  70;  MoiDitstcpl'cu  v.  Lakciiiaii,  P.  R.  7  Q.  P>..  202;  Mal- 
let V.  Bateinan,  L.  R.  1  C.  P..  163.  This  is  only  in  accordance 
with  th(>  general  law  of  contracts,  which  prevents  a  contract  from 
becoming  operative  unless  and  until  all  conditions  precedent  are 
fulfilled.  I5randt  on  ,Suret}-shij).  §  214;  Fanners  and  Mechanics' 
Bank  V.  Kini^sley,  2  Doug.  (Mich.)  379.  .So  too,  whatever  dis- 
<:harges  the  principal  debtor  disch.arges  the  surety.  The  liability  of 
a  surety  on  a  claim  which  is  good  as  against  the  principal,  ceases 
as  soon  as  the  claim  is  extinguished  against  the  principal.  The 
nature  of  the  undertaking  of  a  surety  is  such  that  there  can  be  no 
obligation  on  his  part,  unless  there  is  an  obligation  on  the  part  of 
■the  i^rincipal.  "It  is  correctly  laid  down,  in  Chitty  on  Contracts, 
that  the  contract  of  a  surety  is  a  collateral  engagement  for  an- 
i:)ther,  as  'distinguished  from  an  original  and  direct  agreement  for 
the  party's  own  act ;  and.,  as  stated  in  Theobold  on  Principal  and 
Surety,  *  *  "■'  it  is  a  corollary  from  the  very  definition  of  the 
contract  of  suretyship,  that  the  obligation  of  the  surety,  being 
accessory  to  the  obligation  of  the  principal  debtor  or  obligor,  it 
is  of  its  essence  that  there  should  l^e  a  valid  obligation  of  such  a 
principal,  and  that  the  nullity  of  the  princi])al  oliligation  necessarily 
induces  the  nullity  of  the  accessory.  Without  a  principal,  there 
•can  be  no  accessory.  Nor  can  the  obligation  of  the  surety,  as 
:such,  exceed  that  of  the  principal.  *  *  ■■'  It  would  be  most  unjust 
and  incongruous  to  hold  the  surety  liable,  where  the  principal  is 
not  bound."  Storks,  J.,  in  Ferry  v.  Burchard,  21  Conn.  603.  The 
same  general  doctrine  is  held  in  many  other  cases  in  this  State. 
I'Villey  V.  Faulk,  6  Conn.  74;  DeForest  v.  Strong,  8  id.  522;  Bull 
\.  Allen,  19  id.  loi,  106;  Gla.aier  v.  Douglass,  32  id.  393:  Candee 
V.  Skinner,  40  id.  464. 

It  follows,  then,  that  the  fraudulent  concealment  by  Rowan, 
the  principal,  as  it  prevented  the  statute  of  limitations  from  running 


V'lI.I.ARS   \'S.    I'ALMKR,  205' 

in  his  favor,  also  stopped  it  from  running'  in  favor  of  the  defenda- 
ant,  his  surety.  Bradford  v.  McConnick,  71  Iowa  129;  Boone 
County  V.  Jones,  54  id.  669;  Charles  v.  Hoskins,  14  id.  471. 

Tliere  is  no  error. 

In  this  opinion  the  other  judges  coneurred. 


ViLLARs  z's.  Palmer,  Adm'r,  ct  al  (1873).. 
67  111.  204. 

This  was  a  bill  in  chancery,  by  William  Villars,  against  Levin 
T.  Palmer,  administrator  of  the  estate  of  Guy  Merrill,  deceased, 
and  John  G.  Lever ich,  to  enjoin  proceedings  at  law^  by  Palmer  as 
administrator  of  the  estate  of  Merrill,  for  the  use  of  Leverich, 
upon  a  promissory  note,  given  by  one  George  W.  Taylor  as  prin- 
cipal, and  signed  by  the  complainant  as  surety,  and  payable  to  said 
Guy  Merrill  as  master  in  chancery.  The  bill  showed  that  the 
estate  of  Taylor  was  solvent,  and  that  the  debt  could  have  been 
made  if  the  claim  had  been  presented  before  it  was  barred  by  the 
two  years  limitation.  The  court  below  dismissed  the  bill,  and  the 
complainant  appealed. 

Messrs.  Townscnd  &  Young,  and  Mr.  E.  S.  Terry,  for  the 
appellant. 

Mr.  0.  L.  Davis  and  Mr.  /.  B.  Mann,  for  the  appellees. 

Sheldon,  J.  The  claim  on  the  part  of  the  surety  in  this 
case  is,  that,  as  by  the  neglect  of  the  creditor  to  present  his  claim 
against  the  estate  of  Taylor,  the  principal,  all  remedy  in  respect 
to  the  debt  has  been  lost  against  the  estate  of  the  principal,  that 
should  operate  to  discharge  the  surety. 

The  complaint  is  of  mere  delay,  not  of  any  afifirmative  act  on 
the  part  of  the  creditor,  whereby  the  surety  has  been  affected. 
But  it  is  the  well  established  principle,  that  mere  delay  on  the  part 
of  the  creditor  to  proceed  against  the  principal  does  not  discharge 
the  responsibility  of  the  surety. 

In  cases  of  this  sort,  there  is  not  any  duty  of  active  diligence 
incumbent  on  the  creditor.  All  that  the  surety  has  the  right  to 
require  of  the  creditor,  in  the  absence  of  any  statute  provision,  is. 


■206  GUARANTY   AND   SURETYSHIP. 

that  no  afifirniative  act  shall  be  done  that  will  operate  to  his  preju- 
dice.    It  his  business  to  see  that  the  principal  pays. 

The  law  furnished  the  surety  here  with  ample  remedies  for 
his  protection.  He  might  have  paid  the  debt  according  to  his  un- 
dertaking, and  have  sued  the  principal  himself;  or  he  might  have 
gone  into  a  court  of  equity  after  the  debt  became  due,  and  obtained 
a  decree  that  the  principal  should  pay  it ;  or  he  might,  under  the 
statute,  have  given  to  the  creditor  written  notice  to  put  the  note 
in  suit,  and  thus  have  compelled  him  to  sue  the  principal. 

If  he  has  seen  fit  to  lie  by,  and  the  neglect  to  proceed  against 
the  principal  in  his  life  time,  or  against  his  estate  after  his  decease, 
has  been  the  means  of  depriving  the  surety  of  his  indemnity,  he 
-must  abide  by  the  loss,  and  cannot  throw  it  upon  the  creditor. 

Without  more,  w^e  need  but  to  refer  to  the  cases  of  The  People 
V.  Jlliife  ct  al.  ii  111.  342,  and  Taylor  v.  Beck,  13  id.  376,  where 
the  subject  is  fully  considered  and  the  authorities  cited.  In  the 
former  case,  the  very  point  made  by  the  surety  here  is  decided 
adversely  to  him. 

Under  the  statute  of  March  4,  1869,  Sess.  Laws  1869,  p.  305, 
where  the  principal  maker  of  a  joint  note  has  departed  this  life, 
it  is  made  the  duty  of  the  holder  of  the  note  to  present  the  same 
against  the  estate  of  the  decedent  for  allowance,  to  the  proper 
court,  within  two  years  after  the  granting  of  the  letters  of  admin- 
istration.    Rut  that  statute  is  too  late  to  affect  the  present  case. 

The  decree  of  the  court  below  dismissing  the  bill  is  affirmed. 

Decree  affirmed. 


AucnAMi'AUGH,  Adm'r,  vs.  Schmidt  (1886). 
70  Iowa  642  ;  27  X.  W.  805. 

Action  upon  a  promissory  note  purporting  to  be  executed  as 
:a  joint  note  by  one  Charles  Leipold  and  the  defendant.  The  note 
was  executed  in  Illinois,  where  Leipold  lived,  and  still  lives.  It 
became  due  May  23.  1871,  and  this  action  was  commenced  Jan- 
uary 28,  1885.  The  defendant  pleaded  that  he  signed  the  note 
■merely  as  surety ;  that  under  the  law  of  Illinois  the  note  became 
barred  as  against  Leipold  by  the  statute  of  limitations ;  and  that, 
being  barred  as  against  Leipold,  the  principal,   it  was  barred  as 


AUCHAMPAUGH    VS.     SCHMIDT.  207 

against  his  surety,  the  defendant.  There  was  a  trial  to  a  jury,  ana 
a  peremptory  instruction  given  to  find  for  the  plaintiff.  Verdict 
and  judginent  were  rendered  accordingly,  and  the  defendant 
appeals. 

Woodzvard  &  Cook,  for  appellant. 

E.  E.  Hasner  and  Daniel  Smyser,  for  appellee. 

Adams,  J.  The  note  was  executed  to  one  Schneider,  the 
plaintiff's  intestate.  The  fact  that  the  note  was  signed  by  the 
defendant  as  surety  was  proven  only  by  the  defendant's  wife.  An 
objection  ^\■as  raised  to  her  testimony  on  the  ground  that  she  was 
an  incompetent  witness  to  prove  such  fact  as  against  an  adminis- 
trator. The  court  overruled  the  objection,  and  the  evidence  was 
admitted,  and  no  question  is  now  raised  as  to  the  correctness  of 
that  ruling.  If  we  should  be  of  the  opinion  that  she  was  incom- 
petent, and  that  there  was  no  proper  evidence  that  the  defendant's 
relation  to  the  note  was  that  of  surety,  we  could  not  affirm  upon 
that  ground,  because  we  do  not  know  that  the  defendant  might 
not  have  introduced  other  evidence  upon  the  point  if  his  wife's 
testimony  had  been  excluded. 

We  come,  then,  to  the  question  raised  by  the  answer  and  the 
admitted  evidence  of  suretyship,  and  that  is  as  to  whether  a  claim 
which  is  barred  by  the  statute  of  limitations,  as  against  the  prin- 
cipal debtor,  is  hy  reason  thereof  barred  also  as  against  a  surety. 
In  answer  to  this  question,  we  have  to  say  that  w-e  think  that  it  is. 
No  authority  has  been  cited  upon  either  side  which  is  directly  in 
point.  Ordinarily,  we  may  presume  that,  where  the  statute  has 
fully  run  as  against  the  principal,  it  would  happen  that  it  had  fully 
run  as  against  the  surety.  But  the  case  before  us  has  this  peculiar- 
ity :  The  defendant,  w^hen  the  note  was  executed,  resided  in  Illi- 
nois. Before  the  note  w^as  barred  by  the  statute  of  that  state  he 
removed  to  Iowa,  and  before  the  statute  of  this  state  had  fully 
run  the  action  was  commenced.  If,  then,  the  defendant  were  a 
principal  debtor,  the  note  would  not  be  barred  as  against  him,  how- 
ever it  might  be  as  against  Leipold.  He  must  therefore  rely  solely 
upon  the  fact  that  he  is  surety  upon  the  note,  and  upon  the  bar  as 
against  Leipold.  Such  being  the  case,  it  is  perhaps  not  surpris- 
ing that  no  authority  should  be  cited  that  is  precisely  in  point.  It 
becomes  our  duty,  therefore,  to  attempt  to  determine  the  case  on 
principle.     It  would  not  be  denied  that  a  surety  upon  a  note  may 


208  GUARANTY   AND   SURETYSHIP- 

set  up  any  meritorious  defense  which  the  princij^al,  if  sued,  might 
set  up  in  his  own  behalf.  Now,  when  the  statute  of  hmitations 
has  run  as  against  the  principal,  the  law  excuses  him  from  setting 
up  any  meritorious  defense  which  he  may  hav-e,  and  allows  him 
to  rely  upon  the  technical  defense  of  the  statute  alone.  The  theory 
is  that  he  was  not  under  obligations  to  preserve  any  longer  the 
evidence  of  his  meritorious  defense  if  he  had  any,  and  so  the  court 
will  not  incpiire  whether  he  had  such  defense  or  not.  The  statute 
has  been  very  properly  denominated  the  statute  of  repose.  As  the 
surety  is  allowed  to  set  uj)  any  meritorious  defense  which  the  prin- 
cipal might  have  set  up,  we  are  not  able  to  see  why  he  should  be 
required  to  preserve  the  evidence  of  such  defense  after  the  prin- 
cipal was  not  bound  to  do  so.  Again,  when  a  surety  pays  a  debt, 
it  is  his  right  to  look  to  the  principal  for  reimbursement.  But  a 
surety  paying  a  debt,  after  it  had  become  barred  as  against  the 
principal,  would  be  remediless.  Now,  we  do  not  think  that  a 
creditor,  by  his  own  dilatoriness,  should  be  allowed  to  ptit  the 
surety  in  such  position.  It  is  not  a  ftill  answer  to  say  that  a  surety 
might  have  protected  himself.  It  may  be  conceded  that  he  might. 
But,  practically,  sureties  often  overlook  their  obligations  if  their 
attention  is  not  called  to  them,  and  we  do  not  think  that  the  just 
protection  of  the  rights  of  the  creditor  requires  that  we  should 
hold  so  strict  a  rule  against  them  as  that  for  which  the  plaintiff 
contends. 

It  is  said,  however,  that  the  defendant,  if  he  is  allowed  to 
plead  the  bar  of  the  statute  at  all  as  against  the  principal,  should 
have  averred  and  shown  that  no  judgment  in  fact  had  been  ren- 
dered against  the  principal.  But  we  think  that  we  would  be  jus- 
tified in  assuming,  from  the  plea  made,  that  judgment  had  not 
been  rendered  until  it  was  averred  and  shown  by  the  plaintiff  to 
the  contrary. 

Reversed. 


Guild  z's.  Butler  (1877). 
122   Mass.  498. 

Contract  upon  a  promissory  note  made  by  the  (kfendant  pay- 
able to  Robert  W.  Dresser  &  Co.  or  order,  and.  by  them  indorsed 
to  the  plaintiff. 


GUILD    VS.    BU'lLER.  209 

At  the  trial  in  the  Superior  Court,  hcfore  Pitman,  J.,  it  ap- 
peared that  the  note  was  made  by  the  defendant  for  the  accom- 
modation of  Dresser  &  Co.,  who  at  the  same  time  j^ave  him  an 
agreement  in  writing  that  they  would  themselves  pay  the  note 
at  maturity ;  that  the  plaintiff  did  not  know  this  when  he  took 
the  note,  but,  after  learning  it,  and  after  the  commencement  of 
this  action,  united  with  other  creditors  of  Dresser  &  Co.  in  a 
petition  in  bankruptcy  against  Herman  D.  Bradt,  the  surviving 
partner  of  that  fimi,  (Dresser,  the  other  partner,  having  died,) 
and  afterwards  voted  for  and  signed  a  resolution  of  composition 
mider  the  provisions  of  the  act  of  Congress  of  June  22,  1874,  § 
17,  by  which  the  plaintiff'  with  the  other  creditors  of  Dresser  & 
Co.  agreed  to  take,  in  full  settlement,  twenty  per  rent  of  their 
claims,  to  be  paid  in  three  equal  installments,  in  ten  days,  three 
months  and  six  months  from  the  acceptance  of  that  resolution, 
which  was  approved  by  the  court  in  bankruptcy  and  recorded. 

The  judge  instructed  the  jury  that,  if  the  note  sued  on  was  an 
accommodation  note,  and  the  defendant,  as  between  him  and 
Dresser  &  Co.,  was  but  a  surety,  and  the  plaintiff  knew  that  it 
was  an  accommodation  note  when  he  entered  into  the  resolution 
of  composition,  the  fact  of  his  entering  into  that  resolution  would 
constitute  a  defence  to  this  action.  The  jury  returned  a  verdict 
for  the  defendant ;  and  the  plaintiff  alleged  exceptions. 

P.  H.  Hutchinson,  for  the  plaintiff'. 
R.  Stone,  Jr.,  for  the  defendant. 

Gray,  C.  J.  By  the  existing  acts  of  Congress  upon  the  sub- 
ject of  bankruptcy,  a  bankrupt's  estate  may  be  settled,  and  the 
bankrupt  discharged,  in  either  of  three  ways : 

First.  The  estate  may  be  administered  in  the  ordinary  man- 
ner by  assignees  appointed  for  the  purpose,  and  a  certificate  of 
discharge  be  granted  by  the  court,  with  the  assent,  in  some  cases, 
of  a  certain  proportion  of  the  creditors  who  have  proved  their 
claims.  Any  person  liable  as  surety  for  the  bankrupt  may,  upon 
paying  the  debt,  even  after  the  commencement- of  proceedings  in 
bankruptcy,  prove  the  debt,  or  stand  in  the  place  of  the  creditor 
if  he  has  proved  it;  or,  the  debt  not  having  been  paid  by  him  nor 
proved  by  the  creditor,  may  prove  it  in  the  name  of  the  creditor  or 
otherwise.  V.  S.  Rev.  Sts.  §  5070.  Mace  v.  IVells,  7  How.  272; 
Hunt  V.  Ta\!or,  108  Mass.  508.     But  the  surety's  liability  to  the 


210  GUARANTY   AXD   SL'RliTYSIITP. 

creditor  is  not  affected  by  any  certificate  of  discharge  granted  to 
the  principal.     U.  S.  Rev.  Sts.  §  51 18.     I^logg  v.  Tyler,  6  Mass. 

33- 

Second.  The  estate  may  be  wound  up  and  settled  by  trustees 
nominated  by  the  creditors,  upon  a  resolution  passed  at  a  meet- 
ing for  the  purpose  by  three-fourths  in  value  of  the  creditors 
whose  claims  have  been  proved,  and  confirmed  by  the  court,  and 
upon  the  signing  and  filing,  by  such  proportion  of  the  creditors, 
of  a  consent  in  writing  that  the  estate  shall  be  so  settled ;  in 
which  case  such  consent  and  the  proceedings  under  it  bind  all 
creditors  whose  debts  are  provable,  even  if  they  have  not  signed 
the  consent  nor  proved  their  debts ;  the  trustees  have  the  rights 
and  powers  of  assignees ;  the  winding  up  and  settlement  are 
deemed  proceedings  in  bankruptcy ;  the  court  may  summon  and 
examine  on  oath  the  bankrupt  and  other  persons,  and  compel 
the  production  of  l)ooks  and  papers ;  and  the  bankrupt  may  obtain 
a  certificate  of  discharge  in  the  usual  manner.     U.  S.  Rev.  Sts. 

§  5 'OS- 
Third.  The  creditors,  at  a  meeting  ordered  by  the  court, 
either  before  or  after  an  adjudication  of  bankruptcy,  may  resolve 
that  a  composition  proposed  by  the  debtor  shall  be  accepted  in 
satisfaction  of  the  debts  due  them  from  him.  Such  resolution,  to 
be  operative,  must  be  passed  by  a  majority  in  number  of  the  cred- 
itors whose  debts  exceed  fifty  dollars  in  value,  and  by  a  majority 
in  value  of  all  the  creditors,  and  must  be  confirmed  by  the  signa- 
tures of  the  debtor,  and  of  two-thirds  in  number  and  one-half  in 
value  of  all  his  creditors  The  debtor  is  required  to  attend  at  the 
meeting  to  answer  inquiries,  and  to  produce  a  statement  of  his 
assets  and  debts  and  of  the  names  and  addresses  of  his  creditors. 
The  resolution,  with  this  statement,  is  to  be  presented  to  the 
court;  and  if  the  court,  after  notice  and  hearing,  is  satisfied  that 
the  resolution  has  been  duly  passed  and  is  for  the  best  interest  of 
all  concerned,  the  resolution  is  to  be  recorded  and  the  statement 
filed,  and  the  provisions  of  the  composition  shall  be  binding  on  all 
the  creditors  whose  debts,  names  and  addresses  are  shown  on  the 
statement,  and  may  be  enforced  by  the  court  on  motion  and  rea- 
sonable notice,  and  regulated  by  rule  of  court,  or  may  be  set  aside 
bv  the  court  for  any  suiificient  cause,  and  proceedings  in  bank- 
ruptcy had  according  to  law.  U.  S.  St.  June  22.  1874.  §  17.  This 
section,  providing  for  a  composition  under  the  supervision  of  the 
court,  is  taken  from  and  substantially  follows  §   126  of  the  Eng- 


GELLESPIF  VS.  TORRANCl-:.  211 

lish  bankrupt  act  of  1869,  St.  32  and  33  Vict.  c.  71.  See  Ex 
parte  Jeivctt,  2  Lowell,  393 ;  Re  Whipple,  2  Lowell,  404. 

It  has  been  determined  in  England,  by  decisions  of  high 
authority  and  upon  most  satisfactory  reasons,  that  a  creditor,  by 
participating  in  either  of  the  three  forms  of  proceeding,  whether 
by  assenting  to  a  certificate  of  discharge,  or  by  consenting  to  a 
resolution,  either  for  a  winding  up  through  trustees,  or  for  the 
acceptance  of  a  composition  proposed  by  the  debtor,  does  not 
release  or  affect  the  liability  of  a  surety.  Brozvne  v.  Carr,  2 
Russ.  600;  5  Mo.  &  P.  497,  and  7  Bing.  508.  Megrath  v.  Gray, 
L.  R.  9  C.  P.  216.  Ellis  V.  Wilmot,  L.  R.  10  Ex.  10.  Simpson 
V.  Henning,  L.  R.  10  O.  B.  406.  Ex  parte  Jacobs,  L.  R.  10  Ch. 
211,  overruling  Wilson  v.  Lloyd,  L.  R.  16  Eq.  60. 

The  proceedings  for  a  composition  under  the  statute,  depend- 
ing for  their  validity  and  operation,  not  upon  the  act  of  the  par- 
ticular creditor,  but  upon  the  resolution  passed  by  the  requisite 
majority  of  all  the  creditors,  binding  alike  on  those  who  do  and  on 
those  w^ho  do  not  concur  therein,  (if  their  debts  are  included  in 
the  statement  filed  by  the  debtor,)  and  finally  confirmed  and  estab- 
lished by  the  court  upon  a  consideration  of  the  general  benefit  of 
all  concerned,  differs  wholly  in  nature  and  effect  from  a  volun- 
tary composition  deed,  which  binds  only  those  who  execute  it. 
Oakeley  v.  Pasheller,  4  CI.  &  Fin.  207 ;  6^.  C.  10  Bligh  N.  R.  548. 
Bailey  v.  Edwards.  4  B.  &  S.  761  ;  Bateson  v.  Gosling,  L.  R.'  7 
C.  P.  9 ;  Oriental  Financial  Corporation  v.  Overcnd,  L.  R.  7  Ch. 
142;  Cragoe  v.  Jones,  L.  R.  8  Ex.  81;  Gilford  v.  Allen,  3  Met. 
255;  Phoenix  Cotton  Manuf.  Co.  v.  F idler,  3  Allen,  441. 

Assuming,  therefore,  that  this  defendant,  having  signed  the 
note  for  the  accommodation  of  the  indorsers,  was  to  be  consid- 
ered as  a  surety  for  them,  and  that  the  plaintiff,  after  acquiring 
knowledge  of  that  fact,  stood  as  if  he  had  known  it  when  he  took 
the  note,  yet  no  defence  is  shown  to  this  action. 

Exceptions  sustained. 


Gillespie  et  al.  vs.  Torrance  (1862). 
25  N.  Y.  306. 

Appeal  from  the  Superior  Court  of  the  city  of  New  York. 
Action  upon  a  promissory  note  against  the  indorser  only.     De- 


212  -GUARAXTV    AND   SURETYSHIP- 

fense,  that  the  indorsement  was  for  the  accommodation  of  the 
maker ;  that  the  note  was  one  of  several  given  for  oak  timl)er  sold 
to  the  maker  by  the  plaintiffs;  that  the  timber  was  a  raft  in  the 
Hudson  river,  opposite  the  city  of  New  York,  and  that,  on  making 
the  sale,  the  plaintiffs  produced  certificates  of  inspection  showing 
thai  there  were  29,441  feet  of  first  (juality  oak,  for  which  \'an  Pelt^ 
the  maker  of  the  notes,  agreed  to  pay  27^2  cents  per  foot,  and 
5.523  feet  of  second  (luality  or  refuse  oak,  for  which  Van  Pelt 
agreed  to  ])ay  13)4  cents  per  foot;  that,  by  the  usage  of  the  timber 
trade  in  New  York,  the  seller  is  deemed  to  warrant  that  the  tim- 
ber sold  corresponds  in  quantity  and  quality  with  the  description 
in  such  inspection  certificates ;  that  Van  Pelt  gave  his  notes,  in- 
dorsed by  the  defendant,  for  various  sums,  amounting  in  the  aggre- 
gate to  $9,000,  the  price  of  the  timber  as  computed  from  the 
inspection  certificates,  and  all  of  which  notes  had  been  paid  except 
the  one  in  suit ;  that  after  the  delivery  of  the  timber  it  was  dis- 
covered that  the  inspection  certificates  were  erroneous  in  this,  that 
of  the  timber  of  first  quality  there  was  15,000  feet  less  than  the 
certificates  stated,  and  an  equal  excess  in  the  refuse  timber;  that 
if  the  prices  had  been  correctly  computed  according  to  the  fact, 
instead  of  bfing  computed  according  to  the  certificate,  it  would 
have  amounted  to  less  than  $5,000;  that  the  plaintiffs  had,  there- 
fore, been  over])aid,  and  there  was  no  consideration  for  the  note 
in  suit.  On  the  trial,  the  judge,  under  exception  by  the  defendant, 
excluded  evidence  as  to  the  quantity  of  the  timber  of  the  dift'erent 
qualities :  declined  to  permit  an  amendment  of  the  answer  alleging" 
an  express  warranty:  and  exchidfd  evidence  of  the  usage  set  up 
in  the  answer,  making  a  sale  by  certificate  equivalent  to  a  warranty. 
The  other  facts  stated  in  the  answer  were  substantially  jjroved  or 
admitted.  The  ])laintiffs  had  a  verdict  and  judgment,  which  hav- 
ing been  affirmed  at  general  term,  the  defendant  appealed  to  this 
court. 

Charles  .  I .  h'apallo.  for  the  appellant. 
U'illiiiiii  Slaiilcy,  for  the  respondents. 

Sei-OKX,  J.  The  defense  in  this  case  is  not  foimded  on  a 
failure  of  the  consideration  of  the  note,  otherwise  than  by  a  defect 
in  the  quality  of  the  timber  for  which  it  was  given.  That  being 
so,  if  there  was  neither  warranty  nor  fraud  in  the  sale  of  the  tim- 
ber,   the    defect    in    (|uality    constitutes    no    defense.       Sci.vas  v. 


GILLESPIF.  VS.  TORRANCr:.  213 

Woods,  2  Caines,  48;  S^ccct  v.  Colgate,  20  Johns.  196;  Welsh  v. 
Carter,  i  Wend.  185.  Joliiison  v.  Titus,  2  Mill,  606.  The  answer 
does  not  alleg^e  fraud  in  the  transaction,  and  unless  it  shows  a 
warranty  of  the  (|uaHty  of  the  timber,  it  presents  no  defense  to 
the  note,  either  partial  or  total.  The  argaiment  of  the  appellant's 
counsel,  to  maintain  the  position  that  the  defense  rested  upon  a 
failure  of  consideration,  and  not  upon  a  claim  for  damas^es  on  a 
breach  of  warranty,  is  very  ingenious ;  but  the  answer  and  the 
proof  show  that  all  the  timber  contracted  to  be  delivered  to  Van 
Pelt,  and  for  which  the  notes  were  ^^iven,  was  in  fact  delivered, 
and  the  real  ground  of  complaint  is,  that  a  much  larger  proportion 
of  it  than  was  shown  by  the  inspector's  certificates,  upon  the  faith 
of  which  the  purchase  was  made,  proved  to  be  of  inferior  equality. 
Tlie  law  being  well  established  that  such  defect  of  quality,  in  the 
absence  of  fraud  or  warranty,  constitutes  no  defense  to  the  note, 
or  to  any  part  of  it,  and  there  being  no  pretence  of  fraud,  it  fol- 
lows that  the  defense,  if  there  is  any,  rests  upon  a  breach  of  w^ar- 
ranty. 

The  question  then  arises,  whether  the  plaintifif,  an  accommo- 
dation indorser  upon  a  note  given  by  Van  Pelt  to  the  plaintiffs 
for  the  timber,  can  avail  himself  of  a  breach  of  the  contract  of 
warrantv  in  regard  to  the  quality  of  the  timber,  made  by  the  plaint- 
iffs to  Van  Pelt,  on  the  sale  to  him.  To  decide  this  question,  it  is 
necessary  to  ascertain  the  ground  upon  which  such  defenses,  by 
way  of  recoupment,  as  they  were  denominated  prior  to  the  adoption 
of  the  Code,  now,  partially,  if  not  wholly,  merged  in  the  much 
broader  term,  counter-claim,  were  admitted.  If  we  regard  such 
defenses  as  resting  upon  a  failure  of  the  consideration  of  the  con- 
tract on  which  the  plaintiff's  action  is  founded,  then  unquestionably 
the  defendant  could  avail  himself  of  the  breach  of  warranty  in  this 
case,  l)ecause  an  indorser  or  surety  may  always,  where  the  con- 
tract has  not  been  assigned,  show  a  failure,  partial  or  total,  of  con- 
sideration of  his  principal's  contract  which  he  is  called  upon  to 
perform.  But  if  such  defenses  are  regarded  as  the  setting  off.  of 
distinct  causes  of  action,  one  against  the  other,  then  it  is  clear, 
as  will  be  shown  hereafter,  that  this  defendant  could  not  avail  him- 
self of  such  defense. 

The  subject  of  the  precise  ground  on  which  a  defendant  is 
allowed  to  reduce  a  recovery  against  him,  in  an  action  upon  a 
contract,  by  alleging  and  proving  fraud,  or  breach  of  warranty — 
whether  the  contract    where  there   is   fraud,   is   regarded  as  de- 


214  GUARAXTV    AND   SURETYSHIP- 

stroyec!,  and  the  recovery  had  on  a  quant  it  in  meruit,  or  whether  the 
reduction  of  the  plaintiffs'  claim  rests  upon  a  partial  failure  of 
consideration,  or  upon  the  setting  off  of  distinct  claims  against  each 
other — has  often  been  discussed,  but  without  any  general  concur- 
rence of  opinion  on  the  question.  Real)  v.  Mc.Ulistcr,  4  Wend. 
90,  et  scq.;  S.  C.  in  error,  8  id.  109;  Batter nuin  v.  Pierce,  3  Hill, 
171,  177;  Ives  V.  ra)i  Epps,  22  Wend.  155;  Nichols  v.  Dusen- 
bury,  2  Comst.  286;  Van  Epps  v.  Harrison,  5  Hill  66;  Barber  v. 
Rose,  id.  78 ;  Boston  v.  Butler,  7  East.  479 ;  Withers  v.  Greene,  9 
How.  U.  S.  213. 

A  careful  examination  of  the  subject,  I  think,  must  lead  to  the 
conclusion,  that  wdierever  recoupment,  strictly  such,  is  allowed, 
distinct  causes  of  action  are  set  off  against  each  other.  This  would 
seem  to  follow  from  the  right  of  election,  which  all  the  cases  admit 
the  defendant  has,  to  set  up  his  claim  for  damages  by  way  of  de- 
fense, or  to  resort  to  a  cross-action  to  recover  them.  Ives  v.  Van 
Epps,  22  Wend.  157;  Batternian  v.  Pierce,  3  Hill,  171  ;  Britton  v. 
Turner,  6  X.  H.  481  ;  Halscy  v.  Carter.,  i  Duer,  667 ;  Barber  v. 
Rose,  5  Hill,  81  ;  Stever  v.  Lanwure,  Lalor's  Supp.  352,  note  a. 

Tn  many  cases  the  defendant's  damages  would  exceed  the 
amount  of  the  plaintiff's  claim,  which  shows  conclusively  that  such 
damages  do  not  rest  upon  a  mere  failure  of  consideration.  Where 
there  is  fraud,  the  party  deceived,  on  discovering  the  fraud,  may 
rescind  the  contract;  but  if  he  does  not  do  that,  the  contract  on 
his  part  remains  entire,  not  broken  and  not  modified,  and  he  is 
bound  to  perform  it  fully  according  to  its  terms ;  he  has.  how- 
ever, arising  from  the  fraud,  a  distinct  cause  of  action,  the  amount 
of  which  he  may  set  oft'  against  any  liability  on  his  part  growing 
out  of  the  transaction  in  which  the  fraud  was  perpetrated.  As 
was  said  by  Branson,  I.,  in  J 'an  Epps  v.  Harrison:  "When  sued 
for  the  price,  the  vendee  may  in  general  recoup  damages ;  but  while 
he  retains  the  property  he  cannot  treat  the  contract  as  wholly  void, 
and  refuse  to  pay  anything.  By  retaining  the  property  he  affirms 
the  -c'alidity  of  the  contract,  and  can  be  entitled  to  nothing  more 
than  the  damages  which  he  has  sustained  by  reason  of  the  fraud." 
The  same  principle  is  applicable  to  cases  of  warranty,  except  that 
the  breach  of  warranty  gives  no  right  to  rescind,  unless  there  is 
an  express  contract  to  that  eft'ect.  Street  v.  Blay,  2  Barn.  &  Ad. 
456 ;  Voorhees  v.  Earl,  2  Hill,  288 ;  Gary  v.  Grunian,  4  id.  625 ; 
Muller  V.  Eno,  14  N.  Y.  597;  Thornton  v.  Winn,  12  Wheat.  183; 
Lattin  v.  Davis,  Labor's  Supp.  16.     In  ordinary  cases  of  breach 


GILLESPIE  VS.  TORRANCE. 


215 


of  warranty,  therefore,  both  contracts  remain  binding  to  their  full 
extent,  an(i  where  recoupment  is  allowed,  damages  for  a  breach 
on  one  side  are  set  off  against  like  damages  on  the  other  side.  The 
"cross-claims  arising  out  of  the  same  transaction  compensate  one 
another,  and  the  balance  is  recovered."  8  Wend.  115:  22  id. 
J  56;  3  Hill,  174;  2  Comst.  286. 

It  has  always  been  optional,  as  is  suggested  above,  since  the 
doctrine  of  recoupment  has  gained  a  foothold  in  the  courts,  with 
a  party  who  has  sustained  damages  by  fraud  or  breach  of  warranty 
in  the'  purchase  of  goods,  when  sued  for  their  price,  to  set  off  or 
recoup  such  damages  in  that  action,  or  to  reserve  his  claim  for  a 
cross-action;  and  when  he  elected  to  recoup  he  could  not,  under 
the  Revised  Statutes,  have  a  balance  certified  in  his  favor,  nor 
could  he  maintain  a  subsequent  action  for  such  balance.  Sickles 
V.  Pattisoii,  14  Wend.  257;  Battcrman  v.  Pierce,  3  Hih,  171; 
Wilder  v.  Case,  16  Wend.  583;  Stever  v.  Lmnonre,  Lalor's  Supp. 
352.  note  a  ;  Britton  v.  Turner,  6  N.  H.  481. 

Under  the  Code  of  Procedure,  doubtless  a  balance  might  be 
recovered  (Code,  §§  150-274;  Ogdcn  v.  Coddington,  2  E.  D. 
Smith,  317)  ;  but  the  right  of  election  to  set  up  a  counter-claim  in 
defence,  or  to  bring  a  cross-action  for  it,  still  exists.  Halsey  v. 
Carter,  6  Duer,  667";  Wekli  v.  Hade  ton,  14  How.  Pr.,  97.  Now 
it  is  not  easy  to  reconcile  with  these  established  principles,  the 
right  of  the  defendant  in  this  suit  to  avail  himself  of  the  claim 
which  \'an  Pelt  may  have  against  the  plaintiff's  on  a  breach  of  war- 
ranty. I.  Such  damages  constitute  a  counter-claim,  and  not  a 
mere  failure  of  consideration,  and  not  being  due  to  the  defendant, 
cannot  be  claimed  by  him.  Code.  §  150;  Lemon  v.  Tndl,  13 
How.  Pr.,  248;  16  id.  576,  note.  2.  Van  Pelt  has  a  right  of 
election  whether  the  damages  shall  be  claimed  by  way  of  recoup- 
ment in  the  suit  on  the  note,  or  reserved  for  a  cross-action. 
The  defendant  cannot  make  diis  election  for  him.  3.  If  the 
defendant  has  a  right  to  set  up  the  counter-claim,  and  have  it 
allowed,  in  this  action  it  must  bar  any  future  action  by  \"an  Pelt 
for  the  breach  of  warranty ;  and  as  no  balance  could  be  found  in 
defendant's  favor,  he  might  thus  bar  a  large  claim  in  canceling  a 
small  one.  If  the  right  exists  in  this  case,  it  would  equally  exist 
if  the  note  was  but  $100  instead  of  $1,800.  4.  Supposing  the 
other  notes  given  for  the  timber  to  have  been  indorsed  by  dift'er- 
ent  persons,  for  the  accommodation  of  Van  Pelt,  and  all  to  re- 
mam  unpaid,  each  of  the  indorsers  would  have  the  same  rights  as 


216  GUARANTY   AND   SURETYSHTP- 

the  defendant.  If  they  were  to  set  np  the  same  defence,  how  would 
the  conMictint^  claims  l)e  reconciled? 

In  the  case  which  was  shown  on  the  trial,  there  would  seem 
t<  he  a  strong  equity  in  favor  of  the  defendant  to  have  the  note 
canceled  or  reduced,  hy  applN'ing  towards  its  satisfaction  the  dam- 
ages which  ajipear  to  he  due  to  \'an  I'elt  for  the  hreach  of  war- 
ranty, it  is,  however,  an  equity,  in  which  \'an  Pelt  is  interested 
to  as  great,  and  possihly  to  a  greater,  extent  than  the  defendant, 
and  cannot  he  disposed  of  without  having  him  hefore  the  court, 
so  that  his  rights,  as  well  as  those  of  the  defendant,  may  he  pro- 
tected. That  remedy  may  he  open  to  the  defendant  still,  notwith- 
standing the  judgment;  especially  if  the  insolvency  of  the  parties 
renders  that  course  necessary  for  his  protection.  14  Johns.,  63, 
17  id.,  389;  2  Cow..  261  ;  2  Paige,  581  ;  6  Dana,  32;  8  id.,  164; 
2  Story's  F.q.  Jur.,  §§  T446.  a,  1437-  ^fy  conclusion  is,  that  the 
court  helow  was  right  in  holding  that  the  defendant  could  not  set 
up  the  hreach  of  warranty  in  defence,  partial  or  total,  to  the  suit 
on  the  note ;  and  as  the  warranty  presented  the  only  ground  on 
which  there  could  he  a  claim  of  defence  under  the  answer,  there 
is  no  necessit\-  for  considering  the  other  ([uestions  presented  in 
the  case. 

The  judgment  should  he  alarmed. 

All  the  judges  concurring. 

ludgment  affirmed. 


Peari.  z'.y.  Dkacon   (1857), 
24  r)eav.    186. 

Mr.   h\  Palmer  and  Mr.  Bcvir,  for  plaintiff. 
Mr.  Sclwyn  and  Mr.  A'.  W.  F.Uis,  for  defendants. 

The  Master  oi-  tiii-:  Rolls. 

I  retain  the  opinion  expressed  hy  me  yesterday.  The  facts 
are  shortly  these: — Mr.  Pearson  applied  to  the  defendants,  who 
are  hrewers  at  Windsor,  for  a  loan  of  250/.,  to  enahle  him  to  take 
a  puhlic-house,  called  The  Carpenters'  Arms.  They  said  we  will 
do  so  if  you  will  get  a  good  surety  for  the  amount,  and  assign 
over  your  pension  and  furniture.     That  was  agreed  to:  Pearson 


PEARL  VS.  DKACON. 


217 


'Offered  the  plaintiff  as  his  surety  for  half  the  amount,  and  Castles 
as  surety  for  the  other  half;  the  defendants  aeeepted  them,  and 
on  the  1 6th  of  November,  1852,  two  joint  and  several  ])romiss()rv 
notes  were  given  to  the  defendants,  one  by  Pearson  and  the  plain- 
tiff, and  the  other  by  Pearson  and  Castles.  Six  days  afterwards, 
viz.,  on  the  23rd  of  November,  Pearson  assii^ned  his  pension  and 
ail  the  goods  and  chattels  to  secure  this  debt  of  250/.  ( )n  this 
transaction,  the  first  point  which  was  raised  by  the  plaintiff,  in  my 
opinion,  fails.  He  says  that  this  arrangement  was  a  variation  of 
the  contract  of  suretyship,  and  that  it  discharged  the  plaintiff,  be- 
cause the  money  was  made  payable  on  the  i6th  of  November, 
1858,  or  six  years  after  the  date  of  the  mortgage.  If  the  case 
had  rested  here,  the  plaintiff'  would  probably  have  been  success- 
ful, but  the  deed  goes  on,  "or  at  such  earlier  or  other  time"  as  tUc 
defendants  should  appoint  for  the  payment  thereof  "in  and  by  a 
notice  in  writing."  I  do  not  think  that  this  was  such  a  variation 
in  the  terms  of  the  security  as  to  discharge  the  surety ;  but  the 
question  is  of  litde  importance,  as  I  am  of  opinion,  on  the  evi- 
dence, that  the  i^laintiff"  had  notice  of  this  assignment  and  of  the 
terms  of  it. 

The  only  other  facts  important  to  be  stated  are  these: — The 
defendants  were  landlords  of  The  Carpenters'  Arms,  and  in  the 
year  1856.  four  years  after  this  transaction,  Pearson's  rent  being 
considerably  in  arrear,  the  defendants  distrained  and  put  a  broker 
in  possession  of  the  furniture  under  the  distress;  on  this,  by 
arrangement,  instead  of  selling  the  goods,  they  took  them  at  a 
valuation  for  116/. 

The  question  is  this: — The  furniture  having  been  expressly 
mortgaged  for  the  250/.,  was  it  within  the  power  of  the  defendants, 
to  the  injur>^  of  the  surety,  to  give  up  the  security  on  the  furni- 
ture for  the  250/.,  and  take  it  in  discharge  of  another  and  different 
debt  due  to  themselves?  I  am  of  opinion  that  they  could  not  do 
so.  It  was  said,  that  this  security  was  not  within  the  scope  of  the 
Piamtiff's  contract,  and  that  a  surety  cannot  go  beyond  it.  That 
is  a  mistake  with  respect  to  the  relation  between  a  principal  and 
suretv.  Lord  Eldon  expressly  stated,  in  Craythorne  v.  Szvin- 
bunic,  14  Ves.  169,  that  the  rights  of  a  surety  depend  rather  on  a 
principle  of  equity  than  upon  contract ;  there  may  be  a  quasi  con- 
tract, but  it  arises  out  of  the  equitable  relation  between  the  parties, 
to  be  inferred  from  the  knowledge  of  an  established  principle  of 
equity.    The  same  ^octrine  is  also  stated  in  Mayhcn'  v.  Crickctf,  2 


218  GUARANTY   AND  SURETYSHIP- 

Swan.  191,  and  it  is  laid  down  distinctly,  that  sureties  are  en- 
titled to  the  benefit  of  every  security  which  the  creditor  has  against 
the  principal  debtor,  and  that  whether  the  surety  knows  of  the 
existence  of  those  securities  or  not  is  immaterial.  If  the  creditor 
makes  available  anv  of  his  securities,  the  surety  is  entitled  to  the 
benefit  of  it. 

The  case  of  Cape!  v.  Butler,  2  Sim.  &  S.  457,  is  a  distinct 
authority  for  this  proposition.  Mr*.  Ellis  sought  to  distinguish  that 
case  by  saying,  that,  in  that  case,  there  was  a  recital  of  all  the 
securities,  but  that  here  there  was  none.  The  answer,  however,  is 
this : — That  there  was  notice  to  the  surety  of  the  whole  transaction, 
and  being  so,  the  reciting  it  is  immaterial.  Lord  Eldon  distinctly 
laid  down  in  Mayhew  v.  Cricket t,  2  Swan.  185,  that  it  is  a  matter 
of  perfect  indifference,  whether  the  surety  is  aware  of  another 
security  having  been  taken  by  the  creditor  or  not. 

In  the  judgment  of  Vice-Chancellor  Wood  in  Newton  v. 
Charlton,  10  Hare  651,  there  is  a  statement,  in  every  word  of  which 
I  concur.  He  says,  as  regards,  the  creditor,  "He  is  bound  to  give  to 
the  surety  the  benefit  of  every  security  which  he  holds  at  the  time 
of  the  contract, — every  security  which  he  then  holds ;  and  he  is- 
not  allowed,  in  any  way,  to  vary  the  position  of  the  surety  with 
reference  to  those  securities;  that  has  been  decided  most  dis- 
tinctly in  Mayhew  v.  Crickett  by  Lord  Eldon,  where  there  was  a 
warrant  of  attorney  in  the  hands  of  a  creditor  put  into  operation 
by  the  creditor,  and  a  judgment  obtained,  from  which  he  after- 
wards discharged  the  principal  debtor.  Lord  Eldon  held  it  utterly 
immaterial,  whether  the  warrant  of  attorney  was  known  to  the 
surety  at  the  time  he  entered  into  the  contract  or  not.  The  surety 
had  a  complete  right  to  the  benefit  of  it,  and  if  the  benefit  were  losi 
to  him,  he  was  at  once  discharged." 

It  is  argued  that  this  was  a  security  for  a  separate  and  dis- 
tmct  debt ;  but  I  am  of  opinion  that  it  was  not  taken  for  a  separate 
and  distinct  debt,  but  for  the  debt  of  250/. 

I  am  of  opinion,  therefore,  that  if  the  defendants  enforce  pay- 
ment of  the  rent  due  to  them  out  of  the  furniture,  and  then  seek  to 
compel  the  plaintiff  to  pay  the  debt  for  which  he  became  surety,. 
thc  plaintiff  is  entitled  to  say  to  them,  ''you  must  give  me  the  bene- 
fit of  the  security  on  the  furniture  and  pension  which  were  mort- 
gaged to  you  for  this  debt." 

What  the  defendants  have  done  is  this : — They  have  thought 
fit  to  apply  the  produce  of  the  furniture  to  a  different  and  distinct 


PAIN  VS.  PACKARD. 


219 


debt,  contrary  to  the  original  arrangement,  on  the  terms  of  which, 
it  is  to  be  assumed,  the  surety  consented  to  become  hable.  1  am 
therefore  of  opinion,  that  whatever  the  defendants  have  received 
ought  to  be  appUed  rateably  in  discharge  of  the  whole  debt,  and 
that  the  plaintitT  is  only  liable  to  pay  half  of  the  balance. 

If  it  were  otherwise,  the  result  would  be  this : — That  if  a  man 
advanced  i,ooo/.  to  another  on  a  mortgage  of  an  estate,  and  had 
the  security  of  ten  sureties,  each  of  whom  was  liable  for  lool,  he 
might  release  or  reassign  the  mortgage,  and  then  sue  the  ten 
sureties.    This  is  a  proposition  impossible  to  be  sustamed. 

If  the  defendants  have  received  anything  from  Castles,  it 
must  not  be  taken  into  account;  but  with  respect  to  the  money 
received  from  Pearson,  it  ought  to  be  taken  as  a  discharge  for  the 
debt. 

As  to  the  pension,  either  they  have  received  it  or  they  have 
not;  if  they  have,  it  was  distinctly  applicable  to  the  payment  of 
their  debt;  if  they  have  not,  they  must  show  why  they  did  not 
make  that  securitv  available. 


Pain  vs.  Packard  et  al.   (1816). 
13  Johns.  174. 

This  was  an  action  of  assumpsit  on  a  promissory  note  made 
by  Packard  &  Munson,  in  which  Packard  alone  was  arrested,  the 
other  defendant  being  returned  not  found.  The  defendant,  Pack- 
ard, pleaded:  i.  N071  assumpsit.  2.  That  he  signed  the  note 
which  was  for  $100,  payable  on  demand,  as  surety  for  Munson; 
that  he  urged  the  plaintiff  to  proceed  immediately  in  collecting  the 
money  due  on  the  note  from  Munson  who  was  then  solvent ;  and 
that,  if  the  plaintiff  had  then  proceeded  immediately  to  take  meas- 
ures to  collect  the  money  of  Munson,  he  might  have  obtained  pay- 
ment from  him;  but  the  plaintiff'  neglected  to  proceed  against 
Munson  until  he  became  insolvent,  absconded  and  went  away  out 
of  the  state,  whereby  the  plaintiff  was  unable  to  collect  the  money 
of  ^Munson.  3.  The  third  plea  was  like  the  second,  except  that 
the  defendant  alleged  a  promise,  on  the  part  of  the  plaintiff,  that 


;220  GUARANTY    AXD   SURKTVSII 1 1' 

he  would  ininicdiately  proceed  to  collect  the  money  of  Miinson,  and 
a  breach  of  that  i:)roinise.  by  which  the  defendant  was  deceived 
and  defrauded,  and  i)rcvfntc(l  fnmi  obtainin^^  ihc  money  from 
Munson,  etc. 

'riiere  wa.s  a  denuirrer  to  the  ^:econd  and  Uiird  ])leas  and  a 
joinder  in  denun'rer.  which  was  submitted  to  the  court  without 
arci'unu'nt. 

/\'r  Ciiriani.  The  facts  set  forih  in  the  i)lea  are  admitted  by 
tlie  demurrer.  The  jirinciples  laid  down  in  the  case  of  The  Peo- 
ple V.  Jansen  (7  Johns.  336)  will  warrant  and  sup[X)rt  this  plea. 
We  there  say  a  mere  delay  in  calling  on  the  jjrincipal  will  not 
cli.scharge  the  surety.  The  same  principle  was  fully  and  explicitly 
laid  down  bv  the  court  in  the  case  of  Tail  mad  ge  v.  Bnisli.^  But 
this  is  not  such  a  case.  1 1  ere  is  a  special  request,  by  the  surety, 
to  ])roceed  to  collect  the  money  from  the  principal;  and  an  aver- 
ment of  a  loss  of  the  money  as  against  the  principal,  in  conse-- 
([uence  of  such  neglect.  The  averments  and  facts  stated  in  the 
plea  are  not  rej^ugnant.  or  contradictory  to  the  terms  of  the  note. 
The  suit  here  is  by  the  jiayee  against  the  makers.  The  fact  of 
Packard  having  been  security  only  is  fairly  to  be  presumed  to 
have  lieeii  known  to  the  i)laintilf.  He  was,  in  law  and  equity, 
therefore  bound  to  use  due  diligence  against  the  principal  in  order 
to  exonerate  the  surety.  This  he  has  not  done.  There  can  be 
no  substantial  objections  against  such  a  plea.  It  may  be  said,  the 
suretv  might  have  paid  the  note  and  prosecuted  the  principal ;  but 
although  he  might  have  done  so,  he  was  not  bound  to  do  it.  If 
he  had  a  right  to  expedite  the  plaintiff  in  proceeding  against  the 
principal  and  choose  to  rest  on  that,  he  might  do  so.  In  the  case 
of  Trent  Nav.  Co.  v.  Harlcy  (  10  East.  34)  the  plea  was  similar 
to  the  present  and  not  dennu'red  to. 

The  defendant  must,  accordingly,  have  judgment  upon  the 
demurrer. 

Judgment  for  the  defendant. - 


^Not   reported.  .      ^  ,,  ,       •  ,  i- 

-In  the  courts  of  some  states  the   doctrine   of  this  case  is   followed   without   quali- 
fication;  in  others,  with  these  qualifications-  , 

a.  The   request   of   the   creditor   that   he   sue   the   principal    debtor   must   be   accom- 
panied by  notice  that  the  surety  will  not  continue  to  be  liable  if  his  request  be  ignored. 

b.  The  request  must  be  accompanied  with  an  offer  on  the  part  of  the  surety  to  pay 
the  costs  of  the  suit  or  to  indemnify  the  creditor  for  such  costs. 

c.     If  made  before  the  maturity  of  the  debt,  the  request  will  be  ineffective. 
The   doctrine  of  this   case   is,   however,    repudiated  by   the  courts  of  most   of   the 
:States.  ' 


national  bank  \s.  i'eck.  221 

National   Maiiaiwl    L'>axk   z'^-.    Pkck   (1879). 
127  Mass.  298. 

Contract  on  a  promissory  note  for  $500,  dated  December  29, 
1875,  signed  "Jos.  A.  Benjamin,  Treas."  payable  to  the  order  of 
the  defendant  in  forty-live  days  after  date  at  the  plaintiff  bank,, 
and  indorsed  by  the  defendant.  Trial  at  June  term  1878  of  the 
superior  court,  \vithout  a  jury,  before  Rockwell,  J.,  who  re- 
ported the  case  for  the  determination  of  this  court,  in  substance 
as  follows : 

Benjamin  kept  an  ordinary  banking  account  with  the  plaintiff 
bank.  At  the  time  of  giving  the  note  in  suit,  he  was  treasurer 
of  the  town  of  Egremont,  and  the  bank  gave  him  for  this  note 
a  draft  to  be  used  for  the  payment  of  a  tax  due  from  the  town. 
The  note  and  the  proceeds  of  it  were  not  made  a  part  of  his 
account  with  the  bank,  and  the  bank  regarded  the  note  as  an 
official  or  town  matter. 

On  Februar}'  15,  1876,  when  this  note  matured,  all  things 
necessary  to  charge  the  defendant  as  indorser  were  done.  On 
that  day,  and  ever  since,  the  bank  held  a  note,  made  by  Benja- 
min, which  it  had  discounted,  signed  "Jos.  A.  Benjamin,"  dated 
November  13,  1875,  for  $1500,  payable  in  three  months  after  ^ 
date  at  the  plaintiff  bank  to  one  Callender,  and  indorsed  by  Cal- 
lender.  And  on  said  February  15,  there  stood  to  the  credit  of 
Benjamin,  as  his  balance  of  account,  the  sum  of  $381.10,  and 
the  same  continued  so  to  stand  on  the  books  of  the  bank  until 
about  six  weeks  before  the  trial,-  when  it  was  indorsed  as  of 
February  16,  1876,  on  the  note  for  $1500. 

On  Februarys  16,  1876,  the  day  of  the  maturity  of  the  note 
for  $1500,  the  president  of  the  plaintiff'  Ijank  and  its  principal 
financial  manager,  during  business  hours,  told  the  cashier,  if  the 
$381.10  standing  to  Benjamin's  credit  was  not  drawn  out  by  his 
checks  before  the  close  of  business  hours,  to  apply  it  on  the 
31500  note;  and  at  the  close  of  the  bank  for  that  day,  it  being 
found  that  Benjamin  had  drawn  no  checks  on  said  balance,  he 
again  directed  the  cashier  to  apply  it  on  the  $1500  note. 

On  Februarv  19,  1876,  during  business  hours,  the  defendant 
brought  to  the  bank  a  check  of  Benjamin,  made  and  handed  to 
defendant  on  that  day,  and  which  was  as  follows : 


222  GUARANTY  AND  SURETYSHIP- 

"South  Egremont,  Mass.,  Feb.  15,  1876.  $.381.  National  Mahaiwe 
Bank  pay  to  the  order  of  J.  A.  B.,  Treas..  note  15th  inst.,  three  hundred 
and   eighty-one   dollars.     Jos.   A.   Benjamin." 

The  defendant  at  the  same  lime,  acting  at  the  request  of 
Benjamin,  tendered  to  the  cashier  of  the  plaintiff  hank  this 
check  and  $120  in  money  in  payment  of  the  note  in  suit,  and 
demanded  the  note.  The  money  had  heen  furnished  the  defend- 
ant by  Benjamin,  but  it  did  not  appear  that  he  informed  the 
cashier  of  the  bank  of  this  fact.  The  cashier  decHned  to  receive 
the  check  and  money,  and  tokl  the  defendant  he  could  not  accept 
the  check,  because  he  had  been  directed  to  apply  the  balance  of 
Benjamin's  account  on  another  claim  hekl  by  the  hank,  meaning 
the  Si 500  note.  After  this  refusal,  the  cashier  did,  at  the  request 
of  the  defendant,  receive  the  $120  and  indorse  the  same  on  the 
note  in  suit,  it  being  at  the  time  understood  that  neither  party 
intended  thereby  to  waive  his  rights  in  reference  to  the  check. 
The  $120  have  been  retained  by  the  bank. 

Tt  is  not  the  practice  of  the  bank  to  charge  over-due  notes 
held  by  it  to  the  accotint  of  a  depositor  until  he  has  sufficient 
credits  to  pay  the  note.  Benjamin  became  a  bankrupt  in  the 
spring  of  1876,  and  died  in  July  or  x\ugust  of  that  year. 

Upon  tlie  foregoing  facts,  the  defendant  contended,  as  a 
matter  of  law,  that  the  plaintiff  was  not  entitled  to  recover ;  and 
'the  judge  so  ruled,  and  found  for  the  defendant.  Tf  this  ruhng 
was  correct,  jtidgment  was  to  be  entered  for  the  defendant ;  but 
if  the  plaintiff  was  entitlcvl  to  recover,  judgment  was  to  be  entered 
for  him  for  the  sum  of  $381.10,  and  interest  frum  February  16, 
1876. 

/.  Detvey,  for  the  plaintiff. 
M.  Wilcox,  for  the  defendant. 

Gray,  C.J.  Money  deposited  in  a  bank  does  not  remain  the 
property  of  the  depositor,  upon  which  the  bank  has  a  lien  only; 
but  it  becomes  the  absolute  property  of  the  bank,  and  the  bank 
is  merely  a  debtor  to  the  depositor  in  an  equal  amount.  Foley  v. 
Hill,  1  I'hillips,  399,  and  2  H.  L.  Cas.  28.  Bank  of  Republic  v. 
Millard,  10  Wall.  152;  Can  v.  National  Security  Bank,  107 
Mass.  45.  So  long  as  the  l)alance  of  account  to  the  credit  of  the 
depositor  exceeds  the  amount  of  any  debts  due  and  payable  by 
him  to  the  bank,  the  bank  is  bound  to  honor  his  checks,  and  liable 


NATIONAL    BANK   VS.    PFXK.  223 

to  an  action  by  him  if  it  does  not.  When  he  owes  to  the  bank 
independent  debts,  already  due  and  payable,  the  bank  has  the 
right  to  apply  the  balance  of  his  general  account  to  the  satis- 
faction of  any  such  debts  of  his.  But  if  the  bank,  instead  of  so 
applying  the  balance,  sees  fit  to  allow  him  to  draw  it  out,  neither 
the  depositor  nor  any  other  person  can  afterwards  insist  that  it 
should  have  been  so  applied.  The  bank,  being  the  absolute  owner 
of  the  money  deposited,  and  being  a  mere  debtor  to  the  depositor 
for  his  balance  of  account,  holds  no  property  in  which  the  deposi- 
tor has  any  title  or  right  of  which  a  surety  on  an  independent 
debt  from  him  to  the  bank  can  avail  himself  by  way  of  subroga- 
tion, as  in  Baker  v.  Briggs,  8  Pick.  122,  and  American  Bank  v. 
Baker,  4  Met.  164.  cited  for  the  defendant.  The  right  of  the  bank 
to  apply  the  balance  of  account  to  the  satisfaction  of  such  a  debt 
is  rather  in  the  nature  of  a  set-off,  or  of  an  application  of  pay- 
ments, neither  of  w^hich.  in  the  absence  of  express  agreement  or 
appropriation,  W'ill  be  required  by  the  law  to  be  made  as  to  benefit 
the  surety.  Glazier  v.  Douglass,  32  Conn.  393 ;  Field  v.  Hol- 
land, 6  Cranch,  8,  28;  Brezver  v.  Knapp,  i  Pick.  332;  Upham  v. 
Lefavonr,  11  Met.  174;  Bank  of  Bengal  v.  Radakissen  Mitter,  4 
Moore  P.  C.  140,  162. 

The  general  rule  accordingly  is,  that  where  moneys  drawn 
out  and  moneys  paid  in,  or  other  debts  and  credits,  are  entered, 
by  the  consent  of  both  parties,  in  the  general  banking  account  of 
a  depositor,  a  balance  may  be  considered  as  struck  at  the  date 
of  each  payment  or  entry  on  either  side  of  the  account ;  but  w^here 
by  express  agreement,  or  by  a  course  of  dealing,  between  the 
depositor  and  the  banker,  a  certain  note  or  bond  of  the  depositor 
is  not  included  in  the  general  account,  any  balance  due  from  the 
banker  to  the  depositor  is  not  to  be  applied  in  satisfaction  of  that 
note  or  bond,  even  for  the  benefit  of  a  surety  thereon,  except  at 
the  election  of  the  banker.  Clayton's  case,  i  iNIeriv.  572,  610: 
Bodenhani  v.  Purchas,  2  B.  &  Aid.  39,  45 ;  Simpson  v.  Ingham,  2 
B.  &  C.  65 :  S.  C.  3  D.  &  R.  249 ;  Pemherton  v.  Oakes,  4  Russ. 
154,  16^;  Pease  v.  Hirst,  10  B.  &  C.  122;  S.  C.  5  Man.  &  Ryl.  88; 
Henniker  v.  Wigg,  Dav.  &  Meriv.  160,  171  ;  S.  C.  4  Q.  B.  792, 
79S  :  Sfroiii^  v.  Foster,  17  C.  B.  201 :  Martin  v.  Mechanics  Bank,  6 
Har.  &  Johns.  235,  244;  State  Bank  v.  Armstrong,  4  Dev.  519: 
Commercial  Bank  v.  Hughes,  17  Wend.  94;  Allen  v.  Culver,  3 
Denio,  284.  191  ;  Voss  v.  German  American  Bank,  83  111.  599. 
In  the  decision  in  McDowell  v.  Bank  of  Wilmington  &  Brattdy- 


224  GUAUAXTV  AXD  suki:tvsii  1  P- 

wine,  I  Marring-t.  (Del.j  369,  and  in  the  ilicta  in  Dcncson  v.. 
/^('a/  Estate  Bank,  5  Pike,  283,  298,  cited  for  the  defendant,  this 
distinction  was  overlooked  or  disregarded. 

Jn  many  of  the  cases,  indeed,  the  money  appears  to  have 
been  deposited  after  the  debt  to  the  bank  matured,  so  tliat  the 
case  was  anak)gous  to  the  onhnary  one  of  a  payment,  which, 
not  being  appropriated  l)y  the  debtor,  might  be  appropriated  by 
the  creditor.  I'.nt  where  the  bahince  of  account  is  in  favor  of  the 
depositor  when  his  del)t  to  the  bank  becomes  payable,  it  is  a  case 
of  mutual  debts  and  credits,  which,  except  in  proceedings  in  bank- 
ruptcy or  insolvency,  neither  the  depositor  nor  his  surety  has  the 
right  to  require  to  be  set  off  against  each  other.  Judge  Lowell, 
in  allowing  money  on  deposit  to  the  credit  of  a  bankrupt  to  be  set 
oft'  in  bankruptcy  against  the  aggregate  debt  due  from  him  to  the 
bank,  said :  "This  deposit,  though  it  operates  as  security  and  as 
payment,  was  not  intended  for  either,  but  is  made  so  by  the  bank- 
ruptcy of  the  debtor."  ///  re  North,  2  Lowell,  487.  See,  also, 
Deiiiinon  v.  Boylston  Bank,  5  Cush.  194;  Stro)ig  v.  Foster,  17 
C.  B.  217. 

Jn  Strong  v.  Foster,  a  depositor  gave  to  his  bankers  a  prom- 
issory note  with  a  surety,  which  was  not  entered  in  his  general 
banking  account ;  and  it  was  held,  that  the  surety,  when  sued 
by  the  bankers  on  the  note,  could  not  set  up,  either  as  payment 
or  by  way  of  equitable  defense,  that  shortly  after  the  note  matured 
the  balance  of  account  was  in  favor  of  the  depositor  to  a  greater 
amount,  and  the  plaintiff's  did  not  apply  that  balance  in  discharge 
of  the  note,  or  infomi  the  defendant  for  three  years  afterwards  that 
the  note  remained  unpaid.  But  the  reasoning  of  the  court  applies 
qtiite  as  strongly  when  the  balance  in  favor  of  the  depoistor  exists 
at  the  time  when  his  debt  becomes  payable,  as  when  it  is  created 
by  subsequent  deposits.  Chief  Justice  Jervis  said:  "Here  the 
note  was  never  entered  in  the  account  at  all ;  the  rule  as  to  adjust- 
ing balances  therefore  does  not  api:»ly."  "It  would  be  essentially 
altering  the  position  of  parties,  to  establish  that,  because  a  banker, 
who  holds  a  note  of  a  third  person  for  a  customer,  has  a  balance 
in  his  hands  in  the  customer's  favor  at  the  maturity  of  the  note, 
such  third  person  is  thereby  discharged,  if  it  turns  out  that  the  note 
was  given  by  him  as  surety.  There  is  no  authority  in  equity  for 
any  such  position,  and  none  certainly  in  law.  '  17  C.  V>.  216.  217. 
Anrl  Mr.  justice  Willes  observed:  "As  to  what  was  said  on  the 
part  of  the  defendant,  that,  if  a  set-off  arises  between  the  creditor 


DAVIS  VS.   WELLS  FARGO  &  CO.  225 

and  the  principal  debtor,  the  habiHty  on  the  surety  of  the  note  is 
extinguished ;  that  doctrine  would  lead  to  singular  results.  These 
securities  are  often  given  to  increase  credits  of  bankers  to  their 
customers  If  the  liability  of  the  maker  were  to  depend  upon  the 
state  of  the  customer's  account  at  any  one  moment,  he  might  never 
undergo  the  liability  contemplated  at  all.  The  security  is  given 
witliout  any  reference  to  the  other  side  of  the  account.  This  is 
the  first  time,  I  believe,  that  it  has  ever  been  suggested,  that  when 
a  note  given  under  circumstances  like  these  falls  due,  and  there  is 
a  balance  in  favor  of  the  customer  at  the  time,  that  balance  must  of 
necessity  be  applied  to  the  discharge  of  tlie  note."  ly  C.  B.  224. 
Even  the  ustial  inference  from  the  entry  of  such  a  note  in  the 
account  may  be  controlled  by  other  circumstances.  City  Discount 
Co.  V  McLean,  L.  R.  9  C.  P.  602. 

In  the  case  at  bar,  it  appears  that  the  consideration  received 
by  Benjamin  from  the  plaintiff  bank  for  the  note  in  suit  was  to  be 
used  b}'  him  in  his  official  capacity  as  town  treasurer,  the  note  was 
regarded  by  the  bank  as  an  official  or  town  matter,  and  neither  the 
note  nor  its  consideration  was  ever  made  part  of  his  general  bank- 
ing account ;  and  tliat,  wdien  the  check  in  favor  of  the  defendant 
w^as  drawn  by  Benjamin  and  presented  at  the  bank,  the  bank  held 
a  personal  note  of  Benjamin,  overdue  and  exceeding  in  amount 
the  balance  of  account  is  in  his  favor  at  the  time,  the  president  of 
the  bank  had  directed  the  cashier  to  apply  this  balance  to  the  latter's 
note,  and  the  cashier  so  informed  the  defendant  wdien  he  presented 
the  check.  Under  these  circumstances,  neither  Benjamin,  the 
maker,  nor  the  defendant,  the  indorser,  has  the  right  to  insist  that 
this  balance  of  account  should  be  applied  to  the  satisfaction  of  the 
note  in  suit,  rather  than  of  the  other  note  of  Benjamin ;  and, 
according  to  the  terms  of  the  report,  there  must  be 

Judgment  for  the  plaintiff. 


Davis  et  al,  Plft"s.  in  Err.,  vs.  Wells,  Fargo  &  Company  (1881). 
104  U.  S.  164;  L.  Ed'n,  Book  26,  686. 

In  error  to  the  Supreme  Court  of  the  Territory  of  Utah. 

]\Ir.  James  M.   ]]'oola'orih,  for  plaintiff's  in  error. 

Messrs.  Shcllabarger  &  Wilson,  for  defendants  in  error. 

jTlr.  Justice  Matthews  delivered  the  opinion  of  the  court : 
16 


226  GUARANTY    AM)   SUKi:TVSIIIP. 

The  action  l)elo\v  was  brou.^ht  by  WClls,  Fargo  &  Co.,  against 
the  plaintiffs  in  error,  npon  a  guaranty,  in  the  following  words: 

"For  and  in  consideration  of  one  dollar  lo  us  in  hand  paid  by  Wells, 
Fargo  &  Co.  (the  receipt  of  which  is  hereby  acknowledged),  we  hereby 
guarantee  unto  them,  the  said  Wells,  Fargo  &  Co.,  unconditionally  at  all 
times,  any  indebtedness  of  Gordon  &  Co.,  a  firm  now  doing  business  at 
Salt  Lake  City,  Territory  of  Utah,  to  the  extent  of  and  not  exceeding 
the  sum  of  ten  thousand  dollars  ($10,000)  for  any  overdrafts  now  made, 
or  thai  may  hereafter  be  made,  at  the  l^ank  of  said  Wells,   Fargo  &   Co. 

This  guaranty  to  be  an  open  one,  and  to  continue  one  at  all  times 
to  tiic  amount  of  ten  thousand  dollars,  until  revoked  by  us  in  writing. 

Dated.  Salt  Lake  City,  nth  November,  187.1. 

In  witness  whereof  we  have  hereimto  set  our  hands  and  seals  the 
day  and  year  above  written. 

Erwin  Davis.  [seal] 

J.    N.    IL    Patrick,     [seal] 

Witness:  J.  GoRno.M," 

The  answer  set  up,  by  way  of  defense,  that  there  was  no 
notice  to  the  defendants  from  the  i)laintilTfs  of  their  acceptance 
of  the  guaranty,  and  their  intention  to  act  tinder  it ;  and  no  notice, 
after  the  account  was  closed,  of  the  amount  due  thereon ;  and  no 
notice  of  the  demand  of  payment  upon  Gordon  &  Co.,  aiid  of  their 
failure  to  pay  within  a  reasonable  time  thereafter. 

But  tiiere  was  no  allegation  that  by  reason  thereof  any  loss 
or  damage  had  accrued  to  the  defendants. 

On  the  trial  it  was  in  evidence  that  this  guarantv  was  exe- 
cuted by  the  defendants  below  and  delivered  to  Gordon  on  the  day 
of  its  date,  for  delivery  by  him  to  Wells,  Fargo  &  Co.,  which 
took  place  on  the  same  day ;  that  Gordon  &  Co.  were  then  indebted 
to  the  plaintiffs  below  for  a  balance  of  over  $9,000  on  their  bank 
account ;  that  their  account  continued  to  be  overdrawn,  Wells, 
Fargo  &  Co.  permitting  it  on  the  faith  of  the  guaranty,  from  that 
time  till  July  31,  1875,  when  it  was  closed,  with  a  debit  balance 
of  S6,20o;  that  the  account  was  stated  and  payment  demanded 
at  that  time  of  Gordon  &  Co.,  who  failed  to  make  payment ;  that 
a  formal  notice  of  the  amount  due  and  demand  of  payment  was 
made  by  Wells,  Fargo  &  Co.,  of  the  defendants  below,  on  May 
26,  1876,  the  day  before  the  action  was  brought.  There  was  no 
evidence  of  any  other  notice  having  been  given  in  reference  to 
it ;  either  that  Wells,  Fargo  &  Co.  accepted  it  and  intended  to 
rely  upon  it,  or  of  the  amount  of  the  balance  due  at  or  after  the 
account  was  closed  ;  and  no  evidence  was  offered  of  anv  loss  or 


DAVIS  VS.   WEI.LS  FARGO  &  CO.  227 

damage  to  the  defendants  by  reason  thereof,  or  in  consequence  of 
the  delay  in  giving  the  final  notice  of  Gordon  &  Co.'s  default. 

The  defendant's  counsel  requested  the  court,  among  others 
not  necessar}-  to  refer  to,  to  give  to  the  jury  the  following  in- 
structions, numbered,  first,  second,  third  and  fifth : 

1.  If  the  jury  believes  from  the  evidence  that  the  guaranty 
sued  upon  was  delivered  by  the  defendants  to  Joseph  Gordon, 
and  not  to  the  plaintifif,  but  was  afterwards  delivered  to  the  latter 
by  Joseph  Gordon,  or  by  Gordon  &  Co.,  it  became  and  was  the 
duty  of  Wells,  Fargo  &  Co.  thereupon  to  notify  the  defendants 
of  the  acceptance  of  said  guaranty,  and  their  intention  to  make 
advancements  on  the  faith  of  it,  and,  if  they  neglected  or  failed 
so  to  do,  the  defendants  are  not  liable  on  the  guaranty,  and  your 
verdict  must  be  for  the  defendants. 

2.  If  Wells,  Fargo  &  Co.  made  any  advancements  to  Gordon 
&  Co.  on  overdrafts  on  the  faith  of  said  guaranty,  it  became  and 
was  the  duty  of  plaintifl:  to  notify  the  defendants,  within  a  rea- 
sonable time  after  the  last  of  said  advancements,  of  the  amount 
advanced  under  the  guaranty,  and  if  the  plaintifif  failed  or  neg- 
lected so  to  do.  it  cannot  recover  under  the  guaranty,  and  your 
verdict  must  he  for  the  defendants. 

3.  What  is  a  reasonable  time  in  which  notice  should  be  given 
is  a  question  of  law  for  the  court.  Whether  notice  was  given  is 
one  of  fact  for  the  jury.  The  court,  therefore,  instructs  you  that 
if  notice  of  the  advancements  made  under  said  guaranty  was  not 
given  until  after  the  lapse  of  twelve  months  or  upward  from  the 
time  the  last  advancement  was  made  to  Gordon  &  Co.,  this  w^as 
not.  in  contemplation  of  law.  a  reasonable  notice,  and  your  ver- 
dict, if  you  so  find  the  fact  to  be,  should  be  for  the  defendants. 

5.  Before  any  right  of  action  accrued  in  favor  of  plaintifif 
under  said  guaranty,  it  was  incumbent  on  it  to  demand  payment 
of  the  principal  debtor,  Gordon  &  Co.,  and,  on  their  refusal  to 
pay,  to  notify  the  defendants.  If  the  jury,  therefore,  find  that 
no  such  demand  was  made,  and  no  notice  given  to  the  defend- 
ants, the  plaintiff  cannot  recover  upon  the  guaranty. 

The  court  refused  to  give  each  of  these  instructions,  and  the 
defendants  excepted. 

The  following  instructions  were  given  by  the  court  to  the 
jury,  to  the  giving  of  each  of  which  the  defendants  excepted : 


228  GUARANTY    AND   STRF/rYSIIIP. 

1.  You  are  instructed  that  the  written  guaranty  offered  in 
evidence  in  tliis  case  is  an  unconditional  guaranty  by  defendants, 
of  any  and  all  overdrafts,  not  exceeding  in  amount  $10,000,  for 
which  said  Gordon  &  Co.  were  indebted  to  the  plaintiff"  at  the  date 
of  the  commencement  of  this  suit.  If  the  jury  believe  from  the 
evidence  that  said  guaranty  was  by  said  defendants,  or  by  any 
one  authorized  by  them  to  deliver  the  same,  actually  delivered 
to  plaintiff,  and  that  plaintiff  accepted  and  acted  on  the  same,  such 
delivery,  acceptance  and  action  thereon  by  plaintiff'  bind  the  de- 
fendants, and  render  the  defendants  responsible  in  the  action  for 
all  overdrafts  upon  plaintiff  made  by  Gordon  &  Co.,  at  the  date 
of  and  since  the  date  of  said  delivery  of  said  guaranty,  and  which 
were  unpaid  at  the  date  of  the  commencement  of  this  suit,  not  ex- 
ceeding $10,000. 

2.  The  jury  are  instructed  that  the  written  document  under 
seal,  offered  in  evidence  in  this  case,  implies  a  consideration,  and 
constitutes  an  unconditional  guaranty  of  whatever  overdraft,  if 
any,  not  exceeding  $10,000.  which  the  jury  may  find  from  the 
evidence  that  Gordon  &  Co.  actually  owed  the  plaintiff  at  the 
date  of  the  bringing  of  this  suit ;  and  further,  if  you  believe  from 
the  evidence  that  an  account  was  stated  of  such  overdraft  between 
plaintiff  and  J.  Gordon  &  Co.,  then  the  plaintiff  is  entitled  to  inter- 
est on  the  amount  found  due  at  such  statement,  from  the  date 
thereof,  at  the  rate  of  ten  per  cent  per  annuin. 

These  exceptions  form  the  basis  of  the  assignment  of  errors. 

The  charge  of  the  court  first  assigned  for  error,  and  its  re- 
fusal to  charge  upon  the  point  as  requested  by  the  plaintiffs  in 
error,  raises  the  question  wdiether  the  guaranty  becomes  operative 
if  the  guarantor  be  not  W'ithin  a  reasonable  time  informed  by  the 
guarantee  of  his  acceptance  of  it  and  intention  to  act  under  it. 

It  is  claimed  in  argument  that  this  has  been  settled  in  the 
negative  by  a  series  of  well  considered  judgments  of  this  court. 

It  becomes  necessary  to  inquire  precisely  what  has  been  thus 
settled,  and  what  rule  of  decision  is  applicable  to  the  facts  of  the 
present  case. 

In  .Idaiiis  V.  Jones,  12  Pet.  213,  Mr.  Justice  Story,  delivering 
the  opinion  of  the  court,  said :  "And  the  question  which,  under 
this  view,  is  presented,  is  whether,  upon  a  letter  of  guaranty, 
addressed  to  a  particular  person  or  to  persons  generally,  for 
a   future   credit   to   be   given    to   the   party   in    whose    favor   the 


DAVIS  VS.  wi-:Lr.s  fargo  &  co.  229 

guaranty  is  drawn,  notice  is  necessary  to  be  given  to  the  guar- 
antor that  the  'person  giving  the  credit  has  accepted  or  acted  upon 
the  guaranty  and  given  the  credit  on  the  faith  of  it ;  we  are  all  of 
the  opinion  that  it  is  necessary  and  this  is  not  now  an  open  ques- 
tion in  this  court,  after  the  decisions  which  have  been  made  in 
Russell  V.  (7(7/7^,  7  Cranch,  69 ;  Edmonston  v.  Drake,  5  Pet.  624 ; 
Douglass  V.  Reynolds,  7  Pet.  113;  Lee  v.  Dick,  10  Pet.  482;  and 
again  recognized  at  the  present  term  in  the  case  of  Reynolds  v. 
Douglass,  12  Pet.  497.  It  is  in  itself  a  reasonable  rule,  enabling 
the  guarantor  to  know  the  nature  and  extent  of  his  liability,  to 
exercise  due  vigilance  in  guarding  himself  against  losses  which 
might  otherwise  be  unknown  to  him,  and  to  avail  himself  of  the 
appropriate  means  in  law  and  equity  to  compel  the  other  parties 
to  discharge  him  from  further  responsibility.  The  reason  applies 
with  still  greater  force  to  cases  of  a  general  letter  of  guaranty, 
for  it  might  otherwise  be  impracticable  for  the  guarantor  to  know 
to  whom  and  under  what  circumstances  the  guaranty  attached, 
and  to  what  period  it  might  be  protracted.  Transactions  betw^een 
the  other  parties  to  a  great  extent  might  from  time  to  time  exist, 
in  which  credits  might  be  given  and  payments  might  be  made, 
the  existence  and  due  appropriation  of  wdiich  might  materially 
affect  his  own  rights  and  security.  If,  therefore,  the  questions 
were  entirely  new,  we  should  not  be  disposed  to  hold  a  different 
doctrine;  and  we  think  the  English  decisions  are  in  entire  con- 
formity to  our  own." 

In  Reynolds  v.  Douglass,  12  Pet.  504,  decided  at  the  same 
term  and  referred  to  in  the  foregoing  extract,  Mr.  Justice  McLean 
stated  the  rule  to  be  "That,  to  entitle  the  plaintiffs  to  recover  on 
said  letter  of  credit,  they  must  prove  that  notice  had  been  given 
in  a  reasonable  time  after  said  letter  of  credit  had  been  accepted 
by  them,  to  the  defendants,  that  the  same  had  been  accepted" ;  and 
added,  "This  notice  need  not  be  proved  to  have  been  given  in 
writing  or  in  any  particular  form,  but  may  be  inferred  by  the  jury 
from  facts  and  circumstances  which  shall  warrant  such  inference." 

There  seems  to  be  some  confusion  as  to  the  reason  and  foun- 
dation of  the  rule  and,  consequently,  some  uncertainty  as  to  the 
circumstances  in  which  it  is  applicable.  In  some  instances  it 
has  been  treated  as  a  rule,  inhering  in  the  very  nature  and  defini- 
tion of  every  contract,  which  requires  the  assent  of  a  party  to 
whom  a  proposal  is  made  to  be  signified  to  the  party  making  it, 
in  order  to  constitute  a  binding  promise;  in  others   it  has  been 


230  GUARANTY    AXD   SL:R^:T^•SH  I  ['• 

considered  as  a  rule  springint;-  from  the  i)eculiar  nature  of  the 
contract  of  guaranty,  which  requires,  after  the  formation  of  the 
obhg^tion  of  the  guarantor,  and  as  one  of  its  incidents,  that 
notice  should  be  given  of  the  intention  of  the  guarantee  to  act 
under  it  as  a  condition  of  the  promise  of  the  guarantor. 

The  former  is  the  sense  in  which  the  rule  is  to  l)e  under- 
stood as  having  been  applied  m  the  decisions  of  this  court.  This 
appears  very  plainly,  not  only  from  a  particular  consideration  of 
the  cases  themselves,  but  was  formally  declared  to  be  so  by  Mr. 
Justice  Nelson,  speaking  for  the  court  in  delivering  its  opinion  in 
the  case  oi  Manufacturing  Co.  v.  (/  rich,  lo  How.  475,  where  he 
uses  this  language: 

"He  (the  guarantor)  has  already  had  notice  of  the  accept- 
ance of  the  guaranty  and  of  the  intention  of  the  party  to  act  under 
it.  The  rule  requiring  this  notice  within  a  reasonable  time  after 
the  acceptance  is  absolute  and  imperative  in  tliis  court,  according 
to  all  the  cases;  it  is  deemed  essential  to  an  inception  of  the  con- 
tract: he  is.  therefore,  advised  of  his  accruing  liabilities  upon  the 
guaranty,  and  may  very  well  anticipate  or  be  charged  with  notice 
of  an  amount  of  indebtedness  to  the  extent  of  the  credit  pledged." 

And  in  Wilds  v.  Savage,  i  Story,  22,  Mr.  Justice  Story,  who 
had  delivered  the  opinion  in  the  case  of  Douglass  v.  Reynolds,  7 
Pet.  113.  after  stating  the  rule  requiring  notice  b}-  the  guarantee 
of  his  acceptance,  said :  "This  doctrine,  however,  is  inapplicable 
to  the  circumstances  of  the  present  case ;  for  the  agreement  to 
accept  was  contemporaneous  with  the  guaranty,  and.  indeed,  con- 
stituted the  consideration  and  basis  thereof." 

The  agreement  to  accept  is  a  transaction  between  the  guar- 
antee and  guarantor,  and  completes  that  mutual  assent  necessary 
to  a  valid  contract  between  the  parties.  It  was,  in  the  case  cited, 
the  consideration  for  the  promise  of  the  guarantor.  And  where- 
ever  a  sufficient  consideration  of  any  description  passes  directly 
between  them,  it  operates  in  the  same  manner  and  with  like  effect. 
It  establishes  a  privity  between  them  and  creates  an  ol)ligation. 
The  rule  in  question  proceeds  upon  the  ground  that  the  case  in 
which  it  applies  is  an  offer  or  proposal  on  the  part  of  the  guar- 
antor, which  does  not  become  effective  and  binding  as  an  obliga- 
.  tion  until  accepted  by  the  ]iarty  to  whom  it  is  made ;  that  until 
then  it  is  inchoate  and  incomplete  and  may  be  withdrawn  by  the 
proposer.  Frequently  the  only  consideration  contemplated  is,  that 
the  guarantee  shall  extend  the  credit  and  make  the  advances  to  the 


DAVIS  \'S.   WELLS   '^WRGO  &  CO.  231 

third  person,  for  whose  ])erforniance  of  liis  oljhgation  on  that  ac- 
count, the  guarantor  undertakes.  But  a  guaranty  may  as  well  be 
for  an  existing  debt,  or  it  may  be  supported  by  some  consideration 
distinct  from  the  advance  to  the  principal  debtor,  passing  directly 
from  the  guarantee  to  the  guarantor.  In  the  case  of  the  guaranty 
of  an  existing  debt,  such  a  consideration  is  necessary  to  support 
the  undertaking  as  a  binding  obligation.  In  both  these  cases,  no 
notice  of  assent,  other  than  the  performance  of  the  consideration, 
IS  necessary  to  perfect  the  agreement ;  for,  as  Prof.  Langdell  has 
pointed  out  in  his  Summary  of  the  Law  of  Contracts  (Langdell 
Cas.  on  Cont.,  987),  "Though  the  acceptance  of  an  offer  and  the 
performance  of  the  consideration  are  different  things,  and  though 
the  former  does  not  imply  the  latter,  yet  the  latter  does  necessarily 
imply  the  former ;  and  as  the  want  of  either  is  fatal  to  the  promise, 
the  question  whether  an  oft'er  has  been  accepted  can  never,  in 
strictness,  become  material  in  those  cases  in  which  a  consideration 
is  necessary ;  and  for  all  practical  purposes  it  may  be  said  that  the 
offer  is  accepted  in  such  cases  by  giving  or  performing  the  con- 
sideration." 

If  the  guaranty  is  made  at  the  request  of  the  guarantee,  it 
then  becomes  the  answer  of  the  guarantor  to  a  proposal  made  to 
him,  and  its  delivery  to  or  for  the  use  of  the  guarantee  completes 
the  communication  between  them  and  constitutes  a  contract.  The 
same  result  follows,  as  declared  in  JVilds  v.  Saz'agc,  supra,  where 
the  agreement  to  accept  is  contemporaneous  with  the  guaranty, 
and  constitutes  its  consideration  and  basis.  It  must  be  so  wherever 
there  is  a  valuable  consideration,  other  than  the  expected  advances 
to  be  made  to  the  principal  debtor,  which  passes  at  the  time  the 
undertaking  is  given  from  the  guarantee  to  the  guarantor,  and 
equally  so  where  the  instrument  is  in  the  form  of  a  bilateral  con- 
tract, in  which  the  guarantee  binds  himself  to  make  the  contem- 
plated advances,  or  which  otherwise  creates,  by  its  recitals,  a  privity 
between  the  guarantee  anc'  th.e  guarantor.  For  in  each  of  these 
cases,  the  mutual  assent  of  the  parties  to  the  obligation  is  either 
expressed  or  necessarily  implied. 

The  view  we  have  taken  of  the  rule  under  consideration,  as 
requiring  notice  of  acceptance  and  of  the  intention  to  act  under 
the  guaranty,  only  when  the  legal  effect  of  the  instrument  is  that 
of  an  offer  or  proposal,  and  for  the  purpose  of  completing  its 
obligation  as  a  contract,  is  the  one  urged  upon  us  by  the  learned 
counsel  for  the  plaintiff"  in  error,  who  says,  in  his  printed  brief: 


232  GUARANTY   AND   SURKTVSHIP- 

"For  the  ground  of  the  doctrine  is  n()t  that  the  operation  of  the 
writing  is  conditional  upon  notice,  l)ut  it  is,  that  until  it  is  accepted 
and  notice  of  its  acceptance  given  to  tl^e  guarantor,  there  is  no 
contract  between  the  guarantor  and  tlie  guarantee ;  the  reasoTi 
being  that  the  writing  is  merely  an  oti'er  to  guaranty  the  debt  of 
anotlier,  and  it  must  be  accepted  and  notice  thereof  given  to  the 
party  offering  himself  as  security  before  the  minds  meet  and  he 
becomes  bound.  L'ntil  the  notice  is  given,  there  is  a  want  of  mu- 
tuality;  the  case  is  not  that  of  an  obligation  on  condition,  but  of 
an  offer  to  become  bound  not  accepted;  that  is,  there  is  not  a  con- 
ditional contract,  but  no  contract  whatever." 

It  is  thence  argued  that  the  words  in  the  instrument  which  is 
the  foundation  of  the  present  action — "we  hereby  guarantee  unto 
them,  the  said  Wells,  Fargo  &  Co.,  imcoiidifionally,  at  all  times, 
etc." — cannot  have  the  effect  of  v.-aiving  the  notice  of  acceptance, 
because  they  can  have  no  effect  at  all  except  as  the  words  of  a 
contract,  and  there  can  be  no  contract  without  notice  of  acceptance. 
And  on  the  supposition  that  the  terms  of  the  instrument  constitute 
a  mere  off'er  to  guaranty  the  debts  of  Gordon  &  Co.,  we  accept  the 
conclusion  as  entirely  just. 

But  we  are  unable  to  agree  to  that  supposition.  We  think 
that  the  instrument  sued  on  is  not  a  mere  unaccepted  proposal.  It 
carries  on  its  face  conclusive  evidence  that  it  has  been  accepted  by 
Wells,  Fargo  &  Co.,  and  that  it  was  understood  and  intended  to 
be,  on  delivery  to  them,  as  it  took  place,  a  complete  and  perfect 
obligation  of  guaranty.  That  evidence  we  find  in  the  words — "for 
and  in  consideration  of  one  dollar,  to  us  paid  by  Wells,  Fargo  & 
Co.,  the  receipt  of  which  is  hereby  acknowledged,  we  hereby  guar- 
antee," etc.  How  can  that  recital  be  true,  unless  the  covenant  of 
guaranty  had  been  made  with  the  assent  of  Wells,  Fargo  &  Co., 
communicated  to  the  guarantors?  Wells,  Fargo  &  Co.  had  not 
only  assented  to  it,  but  had  paid  value  for  it,  and  that  into  the  very 
hands  of  the  guarantors,  as  they  by  the  instrument  itself  acknowl- 
edge. 

It  is  not  material  that  the  expressed  consideration  is  nominal. 
That  point  was  made,  as  to  a  guarantee,  substantially  the  same  as 
this,  in  the  case  of  Laivrcncc  v.  Mc.Uui'uit,  2  How.  452,  and  was 
overruled.     Mr.  Justice  Story  said : 

"The  guarantor  acknowledged  the  receipt  of  the  one  dollar 
and  is  now  estopped  to  deny  it.  If  she  has  not  received  it,  she 
would  now  be  entitled  to  recover  it.     A  valuable  consideration, 


DAVIS    VS.    WELLS    TARGO    &    CO.  233 

however  small  or  nominal,  if  given  or  stipulated  for  in  good  faith, 
is.  in  the  absence  of  fraud,  sufficient  to  support  an  action  on  any 
■parol  contract ;  and  this  is  equally  true  as  to  contracts  of  guarantee 
.as  to  other  contracts.  A  stipulation  in  consideration  of  one  dollar 
is  just  as  effectual  and  valuable  a  consideration  as  a  larger  sum 
stipulated  for  or  paid.  The  very  point  arose  in  Dntcliuian  v. 
Toutli,  5  Bing.  (  N.  C),  577,  where  the  guarantor  gave  a  guaranty 
for  the  payment  of  the  proceeds  of  the  goods  the  gaiarantee  had 
consigned  to  his  brother,  and  also  all  future  shipments  the  guar- 
antee might  make  in  consideration  of  two  shillings  and  sixpence, 
paid  him,  the  guarantor.  And  the  court  held  the  guaranty  good, 
and  the  consideration  sufficient." 

It  is  worthy  of  note  that  in  the  case  from  which  this  extract 
is  taken  the  guaranty  was  substantially  the  same  as  that  in  the 
present  case,  and  that  no  question  was  made  as  to  a  notice  of 
acceptance.  It  seems  to  have  been  treated  as  a  complete  contract 
by  force  of  its  tenns. 

It  does  not  aft'ect  the  conclusion,  based  on  these  views,  that 
die  present  guaranty  was  for  future  advances  as  well  as  an  existing 
debt.  It  cannot,  therefore,  be  treated  as  if  it  were  an  engagement, 
in  which  the  only  consideration  was  the  future  credit  solicited  and 
expected.  The  recital  of  the  consideration  paid  by  the  guarantee 
to  the  guarantor  shows  a  completed  contract,  based  upon  a  mutual 
assent  of  the  parties ;  and  if  it  is  a  contract  at  all,  it  is  one  for  all 
the  purposes  expressed  in  it.  It  is  an  entirety  and  cannot  be  sep- 
arated into  distinct  parts.  The  covenant  is  single  and  cannot  be 
subjected  in  its  interpretation  to  the  operation  of  two  diverse  rules. 

Of  course  the  instrument  takes  effect  only  upon  delivery.  But 
in  this  case  no  question  was  or  could  be  made  upon  that.  It  was 
admitted  that  it  was  delivered  to  Gordon  for  delivery  to  the  plain- 
tiff's below,  and  that  Gordon  delivered  it  to  them. 

But  if  we  should  consider  that,  notwithstanding  the  com- 
pleteness of  the  contract  as  such,  the  guaranty  of  future  advances 
was  subject  to  a  condition  implied  by  law  that  notice  should  be 
given  to  the  guarantor  that  the  guarantee  either  would  or  had 
acted  upon  the  faith  of  it,  we  are  led  to  inquire,  what  effect  is  to 
be  given  to  the  use  of  the  words  which  declare  that  the  guarantors 
thereby  "Guarantee  unto  them,  the  said  Wells,  Fargo  &  Go., 
■unconditionally,  at  all  times,  any  indebtedness  of  Gordon  &  Co., 
-etc.,  to  the  extent  and  not  exceeding  the  sum  of  $10,000,  for  any 


234  GUARANTY   AXD   SL'R1':TVS]  i  IP- 

overdrafts  now  made,  or  that  hereafter  may  be  made,  at  the  bank 
of  said  Wells,  Fargo  &  Co." 

Upon  the  supposition  now  made,  the  notice  alleged  to  be 
necessary  arises  from  the  nature  of  such  a  guaranty.  It  is  not, 
and  cannot  be,  claimed  that  such  a  condition  is  so  essential  to  the 
obligation  that  it  cannot  be  waived.  We  do  not  see,  therefore, 
what  less  effect  can  be  ascribed  to  the  words  quoted  than  that  all 
conditions  that  otherwise  would  qualify  the  obligation  arc  by 
agreement  expunged  from  it  and  made  void.  The  obligation  be- 
comes thereby  absolute  and  unqualified ;  free  from  all  coi-^ditions 
wdiatever.  This  is  the  natural,  obvious  and  ordinary  meaning  of 
the  terms  employed,  and  we  cannot  doubt  that  they  express  the 
real  meaning  of  the  parties.  It  was  their  manifest  intention  to 
make  it  unambiguous  that  Wells,  Fargo  &  Co..  for  any  indebted- 
ness that  might  arise  to  them  in  consequence  of  overdrafts  by  Gor- 
don &  Co.,  might  securely  look  to  the  guarantors  without  the  per- 
formance on  their  part  of  any  conditions  precedent  thereto  what- 
ever. 

It  has  always  been  held  in  this  court  that,  notwithstanding 
the  contract  of  guaranty  is  the  obligation  of  a  surety,  it  is  to  be 
construed  as  a  mercantile  instrument  in  furtherance  of  its  spirit 
and  liberally  to  promote  the  use  and  convenience  of  commercial 
intercourse. 

This  view  applies  with  equal  force  to  the  exceptions  to  the 
other  charges  and  refusals  to  charge  of  the  court  below.  These 
exceptions  are  based  on  the  propositions : 

1.  That  if  Wells,  Fargo  &  Co.  neglected  to  notify  the  defend- 
ants below  of  the  amount  of  the  overdraft  within  a  reasonable 
time  after  closing  the  account  of  Gordon  ^  Co. ;  and 

2.  That  if  they  failed  within  a  reasonable  time  after  demand 
of  payment  made  upon  Gordon  &  Co.,  to  notify  the  defendants  of 
the  default,  the  plaintiffs  could  not  recover  upon  the  guaranty. 

For,  if  the  necessity  in  either  or  both  of  these  contingencies 
existed,  to  give  the  notice  specified,  it  was  because  the  duty  to  do 
so  was,  by  construction  of  law,  made  conditions  of  the  contract. 

But  by  its  terms,  as  we  have  shown^  the  contract  was  made 
absolute,  and  all  conditions  waived. 

It  is  undoul)tedly  true,  that  if  the  guarantee  fails  to  give  rea- 
sonable notice  to  the  guarantor  of  the  default  of  the  principal 
debtor,  and  loss  or  damage  thereby  ensues  to  the  guarantor,  to- 


HUNGERFORD  VS.  O  RRIEN. 


235 


that  extent  the  latter  is  chscharged  ;  1)iit  l)oth  the  laches  of  the 
plaintiff  and  the  loss  of  the  defendant  must  concur  to  constitute  a 
defense. 

If  any  intermediate  notice,  at  the  expiration  of  the  credit,  of 
the  extent  of  the  liability  incurred  is  requisite,  the  same  rule 
appHes.  Such  was  the  expressed  decision  of  this  court  in  the  case 
of  Manufacturing  Co.  v.  IVelcli  (supra).  An  unreasonable  delay 
in  giving-  notice,  or  a  failure  to  give  it  altogether,  is  not  a  bar,  of 
itseli. 

There  was  a  question  made  at  the  trial,  as  to  the  meaning  of 
the  word  "overdrafts,"  as  used  in  the  guaranty;  and  it  was  con- 
tended that  it  would  not  include  the  debit  balance  of  accounts 
charged  to  Gordon  &  Murray,  and  assumed  by  Gordon  &  Co.,  as 
their  successors,  before  the  guaranty  was  made,  nor  charges  of 
interest  accrued  upon  the  balances  of  Gordon  &  Co.'s  account, 
which  were  entered  to  the  debit  of  the  account.  The  reason  alleged 
was,  that  no  formal  checks  were  given  for  these  amounts.  The 
point  was  not  urged  in  argument  at  the  bar,  and  was  very  prop- 
erly abandoned.  The  charges  were  legitimate  and  correct,  and 
the  balance  of  the  account  to  the  debit  of  Gordon  &  Co.  was  the 
overdraft  for  which  they  were  liable.  There  could  be  no  doubt 
that  it  w^as  embraced  in  the  guaranty. 

We  find  no  error  in  the  record,  ami  tlic  judgment  is  affirmed. 


HuNGERFORD  VS.  O'Brifn,  impleaded,  etc.,  (1887). 
37  Minn.  306;  34  N.  W.  161. 

The  plaintiff  brought  this  action  in  the  district  court  for  Otter 
Tail  county  upon  a  promissory  note  made  by  the  defendant 
Charles  J.  Sawbridge,  the  payment  of  which  was  guarantied  by 
the  defendant  O'Brien.  The  action  was  tried  before  Baxter,  J., 
and  a  jury,  and  a  verdict  directed  for  plaintiff.  Defendant  O'Brien 
appeals  from  an  order  refusing  a  new  trial. 

Raicson  &  Houpt,  for  appellant. 
E.  E.  Corliss,  for  respondent. 

DiCKixsoN,  J.  The  defendant  Sawbridge  made  his  negotiable 
promissory  note,  which  was  indorsed  to  one  Gage,  who  indorsed  it 


236  GUARANTV    AX!)   SURETYSHIP- 

in  blank  to  the  defendant  O'Brien,  and  he,  before  maturity,  trans- 
ferred it  for  value  to  the  plaintiff,  iiidorsing  upon  the  note  and 
signing-  this  guaranty:  "For  value,  I  hereby  guaranty  the  payment 
of  the  within  note  to  Cassie  Hungerford  or  bearer."  The  note 
was  not  i)aid.  Nothing  was  done  lay  the  plaintiff'  at  the  maturity 
of  the  note  to  fix  the  liability  of  the  indorser  Gage.  The  defendant 
O'Brien  had  no  notice  of  the  non-payment  of  the  note  until  more 
than  a  vear  after  its  maturity.  Upon  the  trial  of  the  issue  raised 
by  the  answer  of  the  defendant  O'Brien,  evidence  was  presented 
tending  to  show  that  the  maker  of  the  note  w^as  solvent  at  the  time 
of  its  maturity,  but  has  since  become  insolvent ;  and  that  the  in- 
dorser, (jage,  was  also  sohent.  The  court  directed  a  verdict  for 
the  plaintiff. 

The  nature  of  the  obligation  ui  the  guarantor  is  aff'ected  by 
the  character  of  the  principal  contract  to  which  the  guaranty  re- 
lates. The  note  expressed  the  absolute  obligation  of  the  maker  to 
pay  the  sum  named  at  the  specified  date  of  maturity  or  before.  The 
guaranty  of  "the  payment  of  the  within  note"  imported  an  uncTer- 
taking,  without  condition,  that,  in  the  event  of  the  note  not  being 
paid  according  tO'  its  terms, — that  is,  at  maturity,— ^the  guarantor 
should  be  responsible.  The  non-payment  of  the  note  at  maturity 
made  absolute  the  liability  of  the  guarantor,  and  an  action  might 
at  once  have  been  maintained  against  him  without  notice  or  de- 
mand. Such  w^as  the  effect  of  the  unqualified  guaranty  of  the  pay- 
ment of  an  obligation  which  was  in  itself  absolute  and  perfect  and 
certain  as  respects  the  sum  to  be  paid,  and  the  time  when  payment 
should  be  made, — all  of  which  was  known  to  the  guarantor,  and 
appears  upon  the  face  of  the  contract.  The  liability  of  the  guar- 
antor thus  becoming  absolute  by  the  non-payment  of  the  note,  the 
neglect  of  tlie  holder  to  pursue  such  remedies  as  he  might  have 
against  the  maker  (the  guarantor  not  having  required  him  to  act) 
would  not  discharge  the  already  fixed  and  absolute  ol)ligation  of 
the  guarantor,  nor  would  neglect  to  notify  the  guarantor  of  the 
non-payment  have  such  effect.  Brozvn  v.  Curiiss,  2  N.  Y.  225 ; 
Alloi  v.  Rightincrc,  20  John.  365.  (11  Am.  Dec.  288);  Nem- 
£omb  v.  Hale,  90  N.  Y.  326;  Read  v.  Ciitts,  7  Greenl.  186,  (22 
Am.  Dec.  184)  ;  Breed  v.  Hillhousc,  7  Conn.  523 ;  Campbell  v. 
Baker,  46  Pa.  St.  243 ;  Roberts  v.  Riddle,  79  Pa.  St.  468 ;  Bank  v. 
Sinclair,  60  X.  H.  100;  Hcaton  v.  Hnlberl,  3  Scam.  489;  Dicker- 
son  V.  Derrickson,  39  HI.  574 ;  Penny  v.  Crane  Mfg.  Co.,  80  111. 
244;  Clay  V.  Edgcrton,  19  Ohio  St.  549;  IV right  v.  Dyer,  48  Mo. 


HUNGERFORD  VS.   O'CRIRN.  237' 

525.  See,  also.  Viiial  v.  Richardson,  13  Allen  521,  modifying 
former  decisions  of  the  same  court. 

It  follows  that  the  fact  that  the  maker  had  hecome  insolvent 
since  maturity,  or  that  a  mortgage  security  had  become  impaired 
by  depreciation  in  the  value  of  the  property,  was  no  defence ;  nor 
was  it  a  defence  that  the  guarantor  was  not  notified  of  the  non-pay- 
ment of  the  note.  We  are  aware  that  the  position  here  taken  is 
opposed  by  some  decisions.  No  valid  agreement  was  shown  be- 
tween the  maker  and  the  plaintiff  extending  the  time  of  payment. 
From  the  position  above  taken,  it  logically  follows  that  the  neglect 
of  the  guarantee  to  take  the  steps  necessary  to  fix  the  liability  of 
the  indorscr,  Gage,  did  not  discharge  the  guarantor.  The  latter, 
by  his  unf|ualified  guaranty  of  ^he  payment  of  the  note,  took  it 
upon  himself  to  see  that  the  note  was  paid,  and  was  therefore  not 
entitled  to  notice  of  its  non-payment.  (Authorities  above  cited.) 
For  the  same  reason,  the  plaintiff  did  not  owe  to  the  guarantor  the 
duty  of  taking  the  steps  necessapy-  to  fix  the  contingent  liability  of 
the  indorser  by  demand  and  notice  of  dishonor.  Philhrooks  v.  Mc- 
Ezven,  29  Ind.  347;  Lang  v.  Brevard,  3  Strob.  Eq.  (So.  Car.)  59; 
Pickens  v.  Finney,  12  Smedes  &  M.  468;  2  Lead.  Cas.  Eq.,  notes 
to  Recs  v.  Berringfon.  No  such  obligation  is  involved  in  this  con- 
tract of  guaranty.  Even  in  the  case  of  an  ordinary  indorsement, 
the  holder,  at  maturity,  is  under  no  obligation  to  his  indorser  to 
give  notice  of  dishonor  to  prior  indorsers  or  parties.  The  last  in- 
dorser becomes  liable  when  he  alone  is  notified,  and  he  in  turn 
may  fix  the  liability  of  prior  parties  by  giving  notice  to  them. 

Order  affirmed. 

[Mitchell.  J.,  (dissenting).  I  am  unable  to  concur  in  the 
proposition  that  the  plaintiff'  owed  no  duty  to  O'Brien  to  take 
steps,  at  the  maturity  of  the  note,  to  tix  the  liability  of  Gage,  the 
indorser.  It  does  not  seem  to  me  that  the  fact  that  O'Brien's 
guaranty  of  payment  was  unconditional  and  absolute  is  at  all  deci- 
sive of  the  question.  As  between  the  parties  to  this  action,  O'Brien 
occupied  the  position  of  surety,  who,  in  case  he  had  to  pay  the 
note,  would  have  recourse  against  Gage,  the  indorser,  provided 
steps  were  taken  to  fix  the  liability  of  the  latter.  The  question, 
therefore,  is  to  be  determined  by  the  equitable  principles  which 
govern  the  relative  rights  and  duties  of  creditor  and  surety. 

It  is  a  well-settled  rule  of  equity  that  any  laches  by  the  creditor 
in  the  care  or  management  of  collateral  remedies  or  securities,  if 
loss  ensues,  will  discharge  the  surety  pro  tanto.    Nelson  v.  Munch,. 


238  •  GIJARAXTV    AND   SURKTVSHIP- 

28  Minn.  314.  322  (9  X.  \V.  Rep.  863).  As  a  surety,  on  payment 
of  the  debt,  is  entitled  to  all  the  securities  of  the  creditor,  if, 
through  the  neg-ligcnce  of  the  creditor  who  has  them  in  his  posses- 
sion and  under  his  control,  a  security,  to  the  benefit  of  which  the 
surety  is  entitled,  is  lost  or  not  properly  perfected,  the  surety,  to 
the  extent  of  such  security,  will  be  discharged.  JVulff  v.  Jay,  L.  R. 
7  O.  B.  756.  And  we  can  see  no  difference  in  this  respect  whether 
the  security  is  chattel  or  personal.  This  is  not  a  case  of  mere  pas- 
siveness  by  the  creditor  in  not  taking  steps  to  enforce  collection 
of  the  debt  at  maturity,  but  an  omission  to  take  steps  to  perfect 
and  fix  the  liability  of  the  indorser,  which  amounted  to  positive 
negligence.  He  had  possession  and  control  of  the  note  on  the  day 
of  its  maturity,  and  consequently  was  the  only  person  who  could 
present  it  for  pa}'ment,  or  who  would  know  whether  or  not  it  was 
paid,  and  hence  was  the  only  person  in  position  to  give  notice  to 
the  indorser  in  case  of  its  non-payment.  To  require  him  to  ao  this, 
would,  I  think,  be  both  good  business  morals  and  good  law. 


TiiK  State,  use  of  Holmes  County,  rx  Swixney  ct  al.  (1882). 

60  Miss.  39. 

Appeal  from  the  circuit  court  of  Holmes  county. 

Hon.  C.  H.  Campbell,  J.  (  )n  the  13111  of  March,  1882,  an 
action  was  brought  in  the  name  of  the  State,  suing  for  the  use  of 
Holmes  County,  against  J.  S.  Hoskins  and  his  sureties,  on  his 
bond  as  tax  collector  of  tliat  countv,  for  two  several  sums  of 
money,  for  the  years  1876  and  1877  respectively,  which,  it  was 
declared,  he  had  collected  and  failed  to  pay  over  to  the  treasurer 
of  the  county  as  the  law  required  of  him  and  as  he  was  bound  by 
the  terms  of  his  bond  to  do. 

The  third  plea  set  up  the  defence  that,  "after  the  signing  of 
said  bond  by  said  defendants,  the  said  plaintiff',  without  the  con- 
sent of  the  said  defendants,  on  the  twelfth  day  of  January,  1877, 
l)y  an  act  of  the  Legislature  of  the  State  of  Mississippi,  approved 
(in  said  day  and  entitled  Wu  act  to  provide  for  the  collection  of 
tbe  outstanding  revenue  for  the  fiscal  year  1876,'  altered,  changed, 
and  extended  the  time  for  the  collection  of  taxes  due  the  State  of 
.Mississippi  aud  the  county  of  Holmes,  and  the  time  for  the  pay- 


M''C0NNELL    \'S.    POOR.  239 

ment  thereof  l)v  tlie  said  lloskins  to  the  State  and  county  treas- 
uries ;  whereby  said  defendants  were  released  as  sureties  on  said 
bond." 

Idle  fourth  plea  contained  the  same  defence  as  the  third,  ex- 
cept that  the  act  of  the  legislature  relied  upon  in  the  latter  as 
releasing  the  defendants  as  sureties  on  the  bond  was  an  act  en- 
titled :  "An  act  in  relation  to  the  public  revenue  and  for  other  pur- 
poses," approved  February  i,  1877.  To  the  third  and  fourth  pleas 
demurrers  were  filed  and  they,  too,  were  overruled.  The  plaintifif 
declined  to  plead  over  and  appealed  to  this  court. 

C.  V.  Gtvin,  for  the  appellant. 
H.  S.  Hooker,  for  the  appellees. 

Campbell,  C.  J.,  delivered  the  opinion  of  the  court. 

We  decline  to  follow  the  courts  of  Illinois,  Tennessee  and 
Missouri,  in  their  views  that  sureties  on  the  bond  of  a  tax  col- 
lector are  discharged  by  an  act  of  the  legislature  passed  after  the 
execution  of  the  bond,  without  their  consent,  giving  further  time 
for  the  collection  of  taxes  and  settlement  by  the  officer,  and 
we  embrace  and  declare  the  more  just  and  politic  doctrine  of 
the  courts  of  Virginia,  Maryland,  and  North  Carolina,  and  hold 
that  the  official  bond  of  the  tax  collector  is  given  with  a  full 
knowledge  of  the  right  of  the  legislature  to  alter  the  dates  fixed 
by  law  for  the  collection  of  taxes  and  the  setttlement  of  the  col- 
lector, and  subject  to  the  exercise  of  that  right  at  the  pleasure  of 
the  legislature,  without  the  assent  of  the  sureties.  The  Comiiioii- 
ivealth  V.  Holmes,  25  Graft.  771  ;  Smith  v.  The  CoininomveaUh, 
25  Graft.  780 ;  The  State  v.  Carleton,  i  Gill,  249 ;  Prairie  v. 
Worth,  78  N.  C.  169.  See  also  Smith  v.  Peoria.  59  111.  412; 
Bennett  v.  The  Auditor,  2  W.  Va.  441  ;  Cooley  on  Tax,  502. 

The  demurrer  to  the  third  and  fourth  pleas  should  have  been 
sustained. 


McCONNELL    VS.     PoOR    (T9OI).  O 

T13  Iowa,  133;  84  N.  W.  968;  52  L.  R.  A.  312. 

Appeal  by  plaintiff  from  a  judgment  of  the  district  court  for 
Des  Moines  County  in  favor  of  defendant  in  an  action  brought 
upon  a  contractor's  bond.     Affirmed. 


240  GUARANTY    AND   SUKllTYSIl  1  T- 

Statement  by  Ladd,  J.  Evans  entered  into  a  contract  witb 
plaintiff,  July  14,  1891,  to  construct  a  dwelling  house  for  him,  and 
on  the  same  day  executed  a  bond  with  defendant  as  surety  con- 
ditioned "that,  if  the  said  Evan  F.  Evans  shall  duly  perfomi  said 
contract,  then  this  obligation  is  to  be  void,  but,  if  otherwise,  the- 
same  to  be  and  remain  in  full  force  and  virtue."  The  house  was 
built  and  in  1892  Evans  began  an  action  against  the  plaintiff  for 
a  balance  due.  McConnell  filed  a  cross  petition  in  wdiich  he- 
averred  several  breaches  of  the  contract  and  prayed  for  damages. 
The  result  was  a  judgment  against  Evans  for  $943,  to  recover 
wdiich  this  action  was  brought  against  the  defendant  as  surety  on 
the  bond.  By  way  of  defense,  he  pleaded  alterations  in  the  con- 
tract in  four  particulars :  ( i )  That  the  work  was  done  under  the 
direction  of  McConnell,  instead  of  Sunderland,  the  architect,  as 
agreed:  (2)  the  broken  ashlar  work  was  constructed  with  close 
joints,  instead  of  being  tuck  pointed,  as  stipulated;  (3)  the  in- 
creased cost  occasioned  by  this  change  was  not  estimated  at  the 
rate  at  which  the  work  was  taken,  and  added  to  the  amount  to  be 
paid  as  exacted  by  the  terms  of  the  contract;  and  (4)  other 
changes  were  made  without  estimating  the  increased  cost,  as  re- 
quired in  the  agreement.  To  these  defenses  the  plaintiff  pleaded 
adjudication  in  Evans  against  McConnell  as  an  estoppel.  The 
defendant  also  answered  that  he  had  advanced,  in  payment  of 
labor  and  material,  with  McConnell's  knowledge  and  consent,  a 
large  amount  of  money,  and  was  released  from  liability  on  the 
bond  to  that  extent.  Trial  to  jury  and  from  judgment  on  a  verdict 
against  him,  the  plaintiff  appeals. 

Ladd,  J.,  delivered  the  opinion  of  the  court: 

.'i.  .1/.  Aiilrobits  and  Secrlcy  &  Clark  with  C.  L.  Poor,  in 
propria  persona  for  appellee. 

Ladd,  J.,  delivered  the  opinion  of  the  court. 

Mow  far  will  a  surety  on  a  bond  be  Ixnnul  by  a  judgment 
against  his  princii)al  alone?  There  is  no  little  confusion  in  the 
language  ot  the  courts  on  this  subject,  and  entire  harmony  does 
not  prevail  in  the  decisions.  This  has  resulted  sometimes  in  treat- 
ing such  a  judgment  as  res  judicata  in  an  action  against  the 
surety,  rather  than  passing  on  the  character  of  the  contract,  and 
simply  holding  him  to  its  perfomiance.  It  is  a  fundamental  prin- 
ciple in  jurisprudence  that  every  man  shall  have  his  day  in  court, 


M 'con NELL    VS.    POOR.  241 

and  shall  be  heard  in  his  own  defense,  and  of  this  rig-ht  he  may 
not,  under  the  constitution  and  laws  of  this  state,  be  deprived. 
For  this  reason,  judgment  against  the  principal  may  never  fore- 
close investigation  of  the  surety's  liability,  unless  by  virtue  of  the 
latter's  undertaking,  he  has  obligated  himself  directly  or  by  impli- 
cation to  be  bound  thereb}\  Where,  by  the  terms  of  the  l>ond, 
the  surety  is  to  be  bound  by  the  litigation  to  which  he  is  not 
a  party,  the  courts  decide,  not  that  the  judgment  is  an  adjudica- 
tion, because  of  the  connection,  but  that  he  must  perfomi  the  con- 
tract as  it  is  written.  Shenandoah  Nat.  Bankv.  Reed,  86  la.  136,  53  N. 
W.  96.  The  only  ground  on  which  sureties  on  official  bonds  gen- 
erally may  be  regarded  as  bound  by  the  judgments  against  their  prin- 
cipals is  that  the  sureties  by  the  terms  of  the  bond  agree,  expressly 
or  impliedly,  to  abide  the  result  of  litigation  against  their  prin- 
cipals. This  principle  is  well  stated  in  Sfehhciis  v.  Shafcr,  48 
Wis.  54,  33  Am.  Rep.  796,  3  N.  W.  835.  "The  nature  of  the 
contract  in  official  bonds  is  that  of  a  bond  of  indemnity  to  those 
who  may  suffer  damages  by  reason  of  the  neglect,  fraud,  or  mis- 
conduct of  the  officer."  The  bond  is  made  with  the  full  knowledge 
and  understanding  that,  in  many  cases,  such  damages  must  be 
ascertained  and  liquidated  by  an  action  against  the  officer  for 
whose  acts  the  sureties  make  themselves  liable,  and  the  fair  con- 
struction of  the  contract  of  the  sureties  is  that  they  will  pay  all 
damages  so  ascertained  and  liquidated  in  an  action  against  their 
principal.  See  also  Masscr  v.  Strickland,  17  Serg.  &  R.  354,  17 
Am.  Dec.  668.  This  court  held  in  Charles  v.  Hoskius,  14  la.  471, 
83  Am.  Dec.  378,  that  judgment  against  a  sheriff  might  be  re- 
ceived in  evidence  as  fixing,  prima  facie,  the  liability  of  the  surety. 
True,  other  reasons  for  so  holding  than  here  suggested  were  as- 
signed. But  the  doctrine  of  stare  decisis  has  no  application  to  the 
reasons  given  for  reaching  the  conclusion ;  it  is  limited  to  the 
very  point  decided.  The  fallacy  in  the  reasoning  of  that  case, 
as  well  as  Lowell  v.  Parker,  10  Met.  309,  43  Am.  Dec.  436,  on 
which  it  was  based,  lies  in  supposing  that,  because  the  surety  may 
claim  the  benefit  of  a  judgment  in  favor  of  his  principal,  it  fol- 
lows that  he  is  concluded  by  one  against  him.  But  die  surety  is 
discharged  by  a  finding  for  his  principal,  not  owdng  to  the  creditor 
being  estopped,  but  for  that  it  establishes  the  absence  of  liability 
of  the  principal ;  and,  if  he  is  not  liable,  the  surety  cannot  be,  as 
his  obligation  is  merely  incidental  to  that  of  the  principal.  Besides, 
17 


242  GUARANTY   AXD   SURETYSHIP- 

the  dischart^c  of  the  principal  does  not  always  release  the  surety. 
If  the  former  he  an  infant  when  executing  an  instrument,  and  is 
discharged  on  that  ground,  the  surety  may  yet  be  held.  Keokuk 
County  State  Bank  v.  Hall,  io6  la.  540,  76' X.  \V.  832.  To  the 
point  is  this  language,  found  in  Jackson  v.  Grisivold,  4  Hill,  528: 
"No  doubt*  '■'  *  *  *  *  a  decision  against  the  debt  would  dis- 
charge him  [the  surety].  That,  however,  is  not  on  the  ground 
that  he  is  a  party,  but  because  the  judgment  or  decree  extinguishes 
the  debt ;  and,  the  principal  thing  being  thus  destroyed,  the  inci- 
dent— the  obligation  of  the  surety — is  destroyed  with  it.  The 
effect  is  the  same  as  a  release  by  the  creditor  or  a  payment  by 
the  debtor." 

It  is  sometimes  urged  that  as  the  surety  has  become  respon- 
sible for  the  debt  or  good  conduct  of  the  principal,  judgment 
establishes  the  fact  on  which  the  surety's  liability  rests.  A  com- 
plete answer  to  this  is  that  the  fact  has  not  been  established  against 
the  surety,  because  he  has  been  afforded  no  opportunity  to  litigate 
the  question.  Under  the  civil  law,  the  surety  was  permitted  to 
defend,  and  even  allowed  to  prosecute  an  appeal  from  tlie  judg- 
ment against  the  ])rincipal,  though  not  a  party  to  the  judgment. 
As  he  was  given  his  day  in  court,  there  appears  no  serious  objec- 
tion to  binding  him  by  the  litigation.  Much  of  the  confusion  in 
the  decisions  seems  to  have  resulted  from  the  attempt  to  apply 
the  rule  of  the  civil  law  i)inding  the  surety  by  the  litigation  against 
the  principal,  without  allowing  the  former  the  participation  there 
accorded.  We  have  called  attention  to  the  inapplicability  of  the 
doctrine  of  estoppel  in  such  cases,  as  the  appellant,  with  much 
propriety,  has  insisted  that,  if  applicable  at  all  logically,  it  must 
extend  to  bonds  in  private  transactions.  The  better  opinion  and 
the  voice  of  authority  is  the  other  way,  and  a  judgment  against 
the  i)rincipal  is  entitled  to  no  consideration  as  against  the  surety, 
unless  by  the  terms  of  the  contract  the  surety  is  to  be  bound 
thereby.  Giltinan  v.  Strong,  64  Pa.  24.1  ;  f' I  etcher  v.  Jackson,  23 
At.  581,  56  Am.  Dec.  98;  Arrington  v.  Porter,  47  Ala.  714;  Doug- 
lass V.  Howland,  24  Wend.  35 ;  De  Greiif  v.  Wilson,  30  N.  J.  Eq. 
437;  Firemen's  Ins.  Co.  v.  McMillan,  29  Ala.  147;  Jackson  v. 
Grisu'old,  4  Hill,  528 ;  2  Van  Fleet,  Former  Adjudication,  §  567 ; 
2  Black  Judgm.  §  592. 

In  Fletcher  v.  Jackson,  23  Vt.  581,  56  Am.  Dec.  98,  the  court, 
speaking  through  Redfield,  J.,  said :  "The  general  rule  undoubt- 
edlv  is  that,  in  a  collateral  undertaking  bv  wav  of  guarantv,  where 


M^CONNELL    VS.    POOR.  243 

.a  suit  is  necessary  to  fix  the  liability  of  the  guarantor,  the  first 
judgment  is  prima  facie  evidence  of  the  default.  But,  where  the 
guarantor  is  liable  without  suit  against  the  principal,  the  judg- 
ment against  him  is  regarded  as  strictly  matter  inter  alios.  The 
judgment  of  eviction,  in  order  to  show  a  breach  of  the  covenants 
of  warranty,  is  a  case  of  the  first  class.  The  judgment  of  evic- 
tion is  a  necessary  step  in  making  out  the  liability  of  the  warrantor ; 
that  is,  the  casus  foederis.  So,  too,  generally,  I  apprehend,  when 
anyone  undertakes  to  indemnify  against  the  consequences  of  a 
suit,  or  that  a  suit  brought  shall  be  effectual,  the  judgment  in 
either  case,  being  the  casus  foederis,  is  prima  facie  evidence  of 
the  liability.  And,  on  the  other  hand,  where  the  suit  may,  in  the 
first  instance,  be  brought  directly  against  the  guarantor,  the  judg- 
ment against  the  principal,  without  notice  to  the  guarantor,  is  not 
evidence ;  and  so,  too,  if  the  guarantor  have  notice  of  suit  against 
the  principal,  he  is  not  obliged  to  conrern  himself  in  its  defense, 
but  may  await  a  suit  against  himself  and  then  insist  upon  the 
right  to  contest  the  whole  ground. 

The  defendant  in  the  case  at  bar  was  not  a  party  to  the  con- 
tract, nor  could  he  have  insisted  on  being  made  a  party  to  the 
action  between  Evans  and  McConnell  thereon.  The  latter  might 
have  brought  suit  against  both  principal  and  surety  on  the  bond, 
but  he  chose,  as  was  his  right,  to  base  his  action  on  the  contract 
alone.  Even  if  these  might  have  been  regarded,  for  some  pur- 
poses, as  one  instrument,  the  appellant  elected  to  treat  them  as 
distinct  and  separate  by  basing  his  suit  against  Evans  solely  on 
the  contract,  and  that  against  Poor  on  the  bond.  The  surety  may 
require  the  principal  to  defend,  for  this  is  his  duty ;  but  the  surety 
owes  no  such  duty  to  the  principal,  and  is  under  no  obligation  to 
defend  him.  Poor  was  not  a  party  to  the  action  on  the  contract, 
for  he  could  neither  appear  and  control  the  suit  nor  appeal  from 
the  decree.  Nor  was  he  privy  to  that  action.  Privity,  says  Green- 
leaf,  denotes  mutual  or  successive  relationship  to  the  same*  right 
of  property.  Privity  in  law  involves  the  right  of  representation, 
and  certainly  the  principal,  in  an  action  against  himself  alone, 
may  not  represent  the  surety.  As  w'as  said  in  Giltinan  v.  Strong, 
64  Pa.  244:  "The  privity  of  the  surety  with  his  principal  is  in 
the  contract  alone,  and  not  in  the  action."  For  the  acts  or 
omissions  of  the  principal  to  which  the  surety  pledges  himself  in 
his  contract  he  is  bound,  and  it  is  only  in  this  respect  the  principal 
represents  the  surety.     This  is  the  criterion  of  the  competency  of 


244  GUARANTY    AND   SURETYSHIP- 

the  principal's  declarations  and  admissions.  Where  these  form  a 
part  of  the  acts  or  omissions  of  the  principal  for  which  the  surety 
is  bound,  they  constitute  portions  of  the  res  gestae,  and  may  bet 
evidence  ag^ainst  the  surety.  But  beyond  this  line  clearly  the 
surety  cannot  be  afilected  by  the  acts  or  admissions  of  his  prin- 
cipal, for  he  is  not  represented  by  him.  True,  Poor  was  the 
attorney  for  Evans  in  the  suit  on  the  contract,  contested  it  with 
zeal  and  persistency,  and  was  charged  with  notice  thereof.  See 
Evans  v.  McConneU,  99  Iowa,  332,  63  N.  W.  570,  68  N.  W.  790. 
Rut  as  surety  he  could  make  no  defense  to  the  action  on  the  con- 
tract. His  client  might  have  revoked  his  authority  at  any  mo- 
ment. He  could  have  gone  further,  and  dismissed  the  action,  or, 
rather,  withdrawn  his  defense  to  the  cross  petition,  without  con- 
sulting the  surety.  See  Jackson  v.  Griszvold,  4  Hill.  528.  For 
the  reasons  stated  we  are  of  opinion  the  district  court  did  not  err 
in  holding  the  defendant  not  bound  1)y  the  findings  against  his 
principal  in  the  former  action. 

2.  The  appellant  insists  the  contract  permitted  changes,  and 
this  is  true.  But  the  manner  of  making  them  is  specifically 
pointed  out.  "The  value  of  such  changes  or  alterations,  without 
additions  or  deductions,  will  be  estimated  according  to  the  rate  at 
which  the  work  has  been  taken,  and  the  amount  added  to  or  de- 
ducted from  the  amount  hereinafter  specified."  This  precluded 
the  parties  from  entering  into  arrangements  for  additional  work, 
or  that  of  a  different  character,  without  compensation  correspond- 
ing relatively  to  the  contract  price.  If  this  were  not  so,  an  entirely 
different  building  from  that  stipulated  might  have  been  erected 
at  the  surety's  cost.  Thus,  the  alleged  change  in  the  broken 
ashlar  work  alone  occasioned  an  additional  expense  of  $1,600  or 
more, — more  than  the  balance  claimed.  While  the  plaintiff  had 
the  option  of  making  alterations,  he  might  not  do  so  without  pay- 
ing therefor  at  the  rate  fixed  by  the  contract. 

3.  The  evidence  was  in  contlict  on  every  issue  submitted  to 
the  jury,  and  sufficient  to  support  the  verdict.  The  instructions 
in  the  respects  criticised  were  clear  and  accurate,  and  included 
those  requested,  in  so  far  as  correctly  stating  the  law. 

Affirmed. 


MORRISON   VS.    ARONS.  245 

Morrison  ct  al.  r,?.  Arons  ct  al.  (1896). 
65  Minn.  321  ;  68  N.  W.  33. 

Action  in  the  district  court  for  Ramsey  county.  The  case 
■was  tried  before  Kelly,  J.,  who  ordered  judgment  against  defend- 
ant Arons  for  $801.43,  and  against  defendants  Williams  and  Hall 
for  $559.50,  with  interest.  From  an  (jrder  denying  a  motion  for 
a  new  trial  defendants  Williams  and  Hall  appealed.     Reversed. 

Fred  N.  Dickson,  for  appellants. 

Frank  A.  Hiitson  and  IVarncr,  Richardson  &  Lawrence,  for 
respondents. 

Collins,  J.  Plaintiffs  entered  into  business  as  co-partners, 
and  employed  defendant  Arons  as  general  manager,  salesman,  and 
collector.  According  to  the  written  contract,  the  employment  was 
to  continue  as  long  as  mutually  agreeable.  Arons  was  to  receive 
as  compensation  for  his  services  a  sum  equal  to  one-half  the  net 
profits  of  the  business,  and  these  profits  were  to  be  ascertained  as 
follows : 

"During  the  existence  of  the  employment  of  said  party  of  the  second 
part,  once  each  month,  commencing  with  December  i,  1892,  a  just  and 
true  inventory  of  the  assets  and  liabilities  of  said  firm  shall  be  taken,  and 
all  accounts  which  are  considered  bad  shall  be  charged  to  profit  and  loss, 
and  from  the  residue  of  the  accounts  due  said  firm  shall  be  deducted  five 
per  cent,  of  the  aggregate  amount  thereof  as  a  reserve  to  cover  bad  debts, 
and  the  excess  of  the  assets  over  the  liabilities  and  the  capital  stock  of  said 
firm  shall  be  determined  and  agreed  upon  as  the  net  profits  of  said  busi- 
ness, and  a  sum  equal  to  one-half  of  such  excess  shall  then  and  there  be 
credited  to  said  party  of  the  second  part  as  and  for  his  compensation, 
and  be  considered  an  expense  of  said  business.  That  when  the  relation 
between  said  firm  and  said  party  of  the  second  part  is  extinguished,  then 
the  actual  amount  of  profit  or  loss,  as  the  case  may  be,  of  the  business  of 
said  firm,  shall  be  determined,  and,  if  there  has  been  a  net  profit,  a  sum 
equal  to  one-half  thereof  shall  be  allowed  said  party  of  the  second  part, 
and  any  errors  in  estimating  the  net  profits  at  the  previous  stated  periods 
shall  then  and  there  be  rectified,  and,  if  said  party  of  the  second  part  shall 
have  withdrawn  more  money  from  said  firm  than  he  is  entitled  to,  he  shall 
tlien  and  there  forthwith  repay  the  same ;  and,  if  there  is  any  amount  due 
him  on  account  of  his  compensation,  it  shall  then  and  there  foi1:hwith  be 
paid  him." 

Arons,  as  principal,  and  defendants  Williams  and  Hall,  as 
stireties,  entered  into  a  bond,  in  which  plaintiffs  were  obligees. 


246  GUARANTY   AND  SURETYSHIP- 

which,  after  reciting  that  Arons  was  about  to  enter  plaintiffs' 
employ  as  general  manager,  salesman,  and  collector,  provided, 
and  was  conditioned,  that : 

"If  the  said  Charles  T.  Arons  shall  faithfully  and  honestly  perform 
all  the  duties  of  his  said  employment,  and  shall  keep  just  and  true  accounts 
of  all  moneys  received  and  expended  and  all  property  bought  and  sold  for 
or  on  account  of  said  firm  by  him  or  under  his  direction,  and  shall  faith- 
fully and  fully,  and  as  often  as  required,  account  for  and  pay  over  to  said 
firm  any  and  all  moneys  belonging  thereto  collected  or  received  by  him, 
or  which  in  any  manner  come  into  his  hands  in  the  course  of  his  employ- 
ment by  said  firm ;  and  shall  forthwith  and  on  demand  repay  to  said  firm 
any  and  all  moneys  he  shall  have  withdrawn  therefrom  for  his  own  use 
in  excess  of  the  compensation  due  him  for  his  services  under  the  terms  of 
his  agreement  with  said  firm  in  that  behalf  (whether  such  moneys  shall 
have  been  so  withdrawn  with  the  consent  of  said  firm  or  otherwise),  as 
often  as  it  shall  be  determined  that  such  overdraft  has  been  made,  then 
the  above  obligation  to  be  void;  otherwise  to  remain  in  full  force  and 
virtue." 

This  action  was  brought  to  recover  an  amount  of  money  said 
to  be  due  on  the  bond,  and  the  trial  was  by  the  court.  Xo  evidence 
was  introduced  tending  to  sliow  any  other  settlement  or  account- 
ing than  that  had  when  Arons'  term  of  employment  ended.  In 
fact  plaintiffs  admitted  that  they  never  ascertained,  and  could  not, 
at  the  time  of  the  trial,  ascertain,  what  the  respective  monthly 
profits  of  the  business  had  been.  At  the  conclusion  of  the  plain- 
tiffs' case  and  again  at  the  conclusion  of  the  entire  case,  the  defend- 
ant sureties  moved  the  court  to  dismiss  the  same  as  to  them  upon 
the  ground  that,  as  it  affirmatively  appeared  from  the  evidence 
and  admissions  that  no  monthly  settlements  or  accounting  had 
been  had  as  provided  for  in  the  contract  of  employment,  the  sure- 
ties upon  the  bond  had  been  released  from  liability.  These  mo- 
tions were  denied,  and  the  court  made  its  findings  of  fact  and  con- 
clusions of  law  ordering  judgment  in  plaintiff's'  favor. 

The  court  found  the  allegation  in  the  complaint  that  no  settle- 
ment or  accounting  was  had  between  the  parties  until  after  Arons' 
emplo}-ment  ceased,  to  be  true.  We  agree  with  the  court  below  in 
its  construction  of  the  contract,  but  wc  cannot  concur  in  its  hold- 
ing that  the  sureties  were  not  discharged  by  the  failure  and  omis- 
sion to  have  monthly  accountings  and  settlements  between  Arons 
and  plaintiffs.  The  former  was  to  have  advanced  to  him  Sioo  each 
month  for  personal  expenses  and  on  account  of  his  compensation 
under  an  agreement  that,  if  this  amount,  with  other  sums  of 
money  which  came  into  his  possession,  exceeded  one-half  of  the 


AETNA  INS.    CO.   VS.    FOWLER.  247 

net  profits  of  the  business,  the  excess  should  he  promptly  refuiuled. 
What  the  profits  were,  and  the  sum  due  to  plaintiiTts,  if  anything, 
were  to  he  provisionally  ascertamed  each  month ;  and,  had  this 
been  done,  it  is  quite  certain  that  plaintiffs  would  have  discovered 
before  the  expiration  of  13  months  that  the  business  was  not 
profitable,  while  Arons  would  have  learned  that  he  was  far  from 
earning  a  living  out  of  it.  The  natural  result  would  have  been 
for  both  parties  to  terminate  their  contract  relation,  and  avoid 
further  loss.  It  is  evident  that  there  would  be  much  less  hesita- 
tion on  the  part  of  a  person  called  upon  to  l;)ecome  a  surety  upon 
a  bond  given  for  the  faithful  performance  of  a  contract  with  such 
conditions  than  if  the  real  situation  was  not  to  be  ascertained  for 
months.  The  condition  in  the  employment  contract  whereby 
monthly  accountings  and  settlements  were  agreed  upon  was  an 
exceedingly  beneficial  one  for  all  concerned.  It  was  an  essential 
feature  of  the  contract  whereby  Arons  agreed  to  conduct  plaintiffs' 
business  enterprise  for  an  indefinite  period  of  time,  his  compen- 
sation to  be  determined  by  the  net  profits.  The  contract  of 
suretyship  was  departed  from  and  varied  when  this  provision  was 
wholly  disregarded,  and  the  case  is  brought  directly  within  the 
rule  that,  if  an  essential  condition  of  such  a  contract  is  not  com- 
plied with,  a  surety  is  not  bound.    A  new  trial  must  be  had. 

Order  reversed. 

Followed  in  Fidelity  Mutual  Life  Ass'n  v.  Deivey    (1901),  83   Minn. 
389 ;  86  N.  W.  423 ;  54  L-  R-  A.  945- 


Aetna  Ins.  Co.  z's.  Fowler  et  al  (1896). 
108  Mich.  557,  66  N.  W.  470. 

Error  to  Saginaw;  Wilder,  J.  Submitted  January  15,  1896. 
Decided  ]\Iarch  11,  1896. 

Assumpsit  by  the  Aetna  Insurance  Company  against  Charles 
G.  Fowler,  Chester  Brown,  and  Gustavus  H.  Fuerbringer  upon 
an  indemnity  bond.  From  a  judgment  for  plaintiff  on  verdict 
directed  by  the  court,  defendants  Brown  and  Fuerbringer  bring 
error.    Reversed. 


Wood  &  Joslyn,  for  appellants. 
IVeadock  &  Pnrcell,  for  appellee. 


248  GUARANTY    AXH   SURKTS'SIITP- 

MoxTGOMF.Rv.  J.  Action  on  the  Ixjncl  of  an  insurance  agent. 
Defendant  Fowier  was  employed  as  the  agent  of  the  company  at 
Saginaw,  anc'  in  December,  1883.  executed  a  bond,  with  liis  co- 
defendants  as  sureties,  the  conchtions  being  as  follows : 

■■'rhc  condition  of  this  obligation  is  such  that  whereas  the  above- 
named  Charles  G.  Fowler  has  been  appointed  agent  of  the  Aetna  Insur- 
ance Company  in  Saginaw,  Saginaw  county,  State  of  Michigan,  who  will 
receive  as  such  agent  sums  of  money  for  premiums,  payments  of  losses, 
salvages,  collections,  or  otherwise,  for  goods,  chattels,  or  other  property 
of  the  said  insurance  company,  and  is  to  keep  true  and  correct  accounts 
of  the  same,  pay  over  such  money  correctly,  and  make  regular  reports  of 
the  business  transacted  by  him,  to  the  said  Aetna  Insurance  Company, 
and  in  every  way  faithfully  perform  the  duties  as  agent,  in  compliance 
with  the  instructions  of  the  company  through  its  proper  officers,  and  at 
the  end  of  the  agency,  by  any  cause  whatever,  shall  deliver  up  to  the 
authorized  agent  of  said  coinpany  all  its  money,  books,  and  property  due 
from  or  in  possession.  Now,  then,  if  the  aforesaid  agent  shall  faithfully 
perform  all  and  singular  the  duties  of  the  agent  of  the  Aetna  Insurance 
Company,  then  this  obligation  shall   he   null  and  void." 

The  instructions  to  agents  were  to  send  statements  of  all  busi- 
ness transacted  during  the  previous  month  as  early  as  the  12th  of 
each  montli.  The  testimony  shows  that  for  three  months  prior  to 
September  1,  1893,  the  defendant  i<\)wler  failed  to  send  remit- 
tances, and  it  was  shown  tliat  it  was  not  the  custom  of  the  com- 
pany to  insist  upon  absolute  promptness  in  remittance,  but  that 
after  three  months'  delay  it  was  the  custom  of  the  company  to  dis- 
charge the  delinquent  agent.  The  testimony  further  shows  that 
in  the^  latter  part  of  July  or  the  first  of  August,  1893,  the  special 
agent  of  the  company,  a  Air.  Xeal,  visited  Saginaw,  and.  as  he 
described  it,  found  the  agency  in  a  "rocky  condition  ;"  and.  while 
counsel  were  disagreed  as  to  the  effect  of  his  testimony,  we  think  it 
is  at  least  open  to  the  construction  that  he  then  learned  that  Fowler 
had  mi.sai)propriated  the  funds  of  the  company,  and  invested  them 
in  realty.  The  circuit  judge  directed  a  verdict  for  the  plaintiff. 
The  recovery  included  a  shortage  in  accounts  before  August  ist, 
and  a  shortage  of  $314.16  arising  from  the  August  business. 

Two  contentions  are  made :  f-'irsl,  that  it  was  the  duty  of  the 
cnnipany  to  notify  the  sureties  of  any  delay  in  the  remittance,  at 
once,  and  that  the  continuance  of  the  agent  after  failure  to  remit 
in  accordance  with  the  instructions  of  the  company  to  agents  re- 
leased the  sureties  as  to  future  tran.sactions ;  and,  second,  that  the 
company,    on    the   discovery   of    the    misappropriation    of    funds, 


AETNA   I  VS.   CO.   \'S.   FOWLEU. 


249 


August  I  St,  was  bound  to  discharo-e  the  agent,  or,  at  least,  the 
.sureties  were  not  tound  to  respond  for  his  future  defalcations, 
unless,  after  being  informed  of  his  previous  acts  of  dishonesty, 
thev  consented  to  his  retention. 

We  think  that  the  court  below  correctly  ruled  that  the  mere 
fact  that  the  company  had  knowledge  that  the  agent  had  failed  to 
remit  did  not  hnpose  upon  it  the  duty  to  notify  the  sureties  or 
discharge  the  agent.  Watertuzvn  Fire  Ins.  Co.  v.  Siuiuions.  131 
Mass.  85  (41  Am.  Rep.  196)  :  Atlantic,  etc.,  Tel.  Co.  v.  Barnes, 
64  N.  Y.  385  (21  Am.  Rep.  621).  The  duty  which  the  company 
owed  to  the  sureties  was  not  a  duty  of  active  vigilance,  to  ascer- 
tain whether  the  agent  had  been  guilty  of  fraud  (the  sureties' 
undertaking  was  a  guaranty  of  his  fidelity),  but  what  was  due 
from  the  employer  w^as  good  faith  to  the  sureties.  Just  as  it  would 
have  been  a  fraud  to  withhold  knowledge  of  previous  dishonesty 
-of  the  agent  presumably  not  known  to  the  sureties,  but  possessed 
by  the  company,  so  it  would  be  a  breach  of  good  faith  for  die 
company  to  continue  the  agent  in  a  place  of  trust  after  discovering 
his  dishonesty  or  defalcation,  which  is  presumptively  and  in  fact 
unknown  to  the  sureties,  and  without  notifying  the  sureties  of  the 
facts,  and  giving  them  an  opportunity  to  elect  as  to  wdiether  they 
will  continue  the  risk.  This  is  the  doctrine  of  the  leading  case  of 
Phillips  V.  Foxall  L,.  R.  7  O.  B.  666.  The  cases  of  Watertozvn 
Fire  Ins.  Co.  v.  Siniiiioiis  and  Atlantic,  etc.,  Tel.  Co.  v.  Barnes  are 
not  inconsistent  with  this.  The  substance  of  the  holding  in  each  of 
these  cases  is  that  the  mere  failure  of  remittance  does  not  neces- 
sarilv  amount  to  notice  of  dishonesty  on  his  part,  and  that  applies 
to  the  present  case  as  regards  the  charges  occurring  before  August. 
There  is  no  evidence  that  prior  to  August  the  company  had  actual 
notice  that  Fowler  had  converted  any  of  the  funds  to  his  own  use. 
or  w^as  more  than  negligent  in  remitting  or  collecting  the  premi- 
ums ;  but  as  to  the  transactions  in  August  the  case  is  different. 
Under  section  9191,  2  How.  Stat.,  it  is  made  an  offense  for  an 
insurance  agent  to  receive  and  invest  money  of  the  company  with- 
out its  assent :  and,  as  we  before  stated,  we  think  there  was  testi- 
mony tending  to  show  notice  to  the  company  about  the  ist  of 
August  that  Fowler  had  invested  the  funds  of  the  company  in 
realty.  If  the  company,  through  its  special  agent,  then  knew^  this 
fact,  it  cannot  be  said  not  to  have  had  notice  of  the  dishonesty  of 
the  agent :  and.  if  it  had  such  notice,  it  was  the  duty  of  the  com- 
pany not  to  longer  trust  its  funds  with  the  agent  until  the  sureties 


250  GUARANTY   AND   SURICTYSII I  P- 

had  consented,  with  knowledge  of  the  facts,  to  be  held  responsible 
for  the  acts  of  a  dishonest  agent.  See,  further,  2  Brandt,  Sur. 
§  423  ;  Connecticut  Mut.  Life  his.  Co.  v.  Scott,  81  Ky.  540. 

Judgment  reversed,  and  0  new  trial  ordered. 

The  other  Justices  concurred. 


Butler  vs.  United  States  (1874). 

21  Wall.  (88  U.  S.)  272;  L.  Edn.  Bk.  22,  614. 

In  error  to  the  Circuit  Court  of  the  United  States  for  the 
Eastern  District  of  Tennessee. 

This  was  an  action  of  debt  in  the  court  below,  on  a  joint  and 
several  internal  revenue  bond  executed  by  Benjamin  B.  Emery,  as 
principal,  and  by  Roderick  R.  Butler,  Ethan  A.  Sawyer  and  Wil- 
liam Choppin  as  sureties,  in  the  sum  of  $15,000.  Butler  defended 
on  the  ground  that,  at  the  time  he  signed  and  affixed  his  seal  to  the 
bond,  it  was  a  mere  printed  form,  with  blank  spaces  for  the  names, 
dates  and  amounts  to  be  inserted  therein  :  and  that  the  blanks  were 
not  filled,  and  there  was  no  signature  thereto,  except  Emery's;  that 
Emery  promised,  if  Butler  would  sign  the  bond,  he  would  fill  up 
the  blanks  with  the  sum  of  $4,000,  and  would  procure  two  addi- 
tional securities  in  the  District  of  Columbia,  each  of  whom  was  to 
be  worth  $5,000;  and  that  the  bond  was  delivered  to  Emery  with 
the  understanding  and  agreement  that  the  liond  otherwise  was  not 
to  be  binding  on  the  defendant,  but  was  to  be  returned  to  him ;  that 
the  defendant  never  after  ratified  or  acknowledged  the  validity  of 
the  bond ;  that  the  other  sureties  did  not  reside  in  the  District  of 
Colum1)ia,  and  were  wholly  insolvent  and  worthless ;  and  that 
Emery  olitained  the  signature  by  false  and  fraudulent  representa- 
tions. The  circuit  judge  ruled  that  this  was  no  defense  to  the 
action;  a  verdict  was  taken  for  the  plaintiffs,  and  the  defendant 
excepted  and  brought  this  writ  of  error. 

Messrs.  .S\  Shellabargcr,  H.  Maynard  and  J.  M.  Wilson,  ior 
plaintiff  in  error. 

Mr.  C.  H.  Hill,  Asst.  Atty.-Cien.,  for  defendant  in  error. 

Mr.  Chief  Justice  M^aite  delivered  the  opinion  of  the  court: 


BUTLER  VS.    U.   S.  251 

We  cannot  distinguish  this  case  in  principle  from  Dair  v.  U.  S., 
i6  Wall,,  I  (83  U.  S.,  XXL,  491).  The  printed  form,  with  its 
blank  spaces,  was  sigiied  by  Butler  and  delivered  to  Emery,  with 
authority  to  fill  the  blanks  and  perfect  the  instrument,  as  a  l)ond  to 
secure  his  faithful  service  in  the  office  of  Collector  of  Internal 
Revenue.  He  was  also  authorized  to  present  it,  when  perfected, 
to  the  proper  officer  of  the  Government  for  approval  and  accept- 
ance. If  accepted,  it  was  expected  that  he  would  at  once  be  per- 
mitted to  enter  upon  the  performance  of  the  duties  of  the  office 
to  which  it  referred. 

It  is  true  that,  according  to  the  plea,  this  authority  was  accom- 
panied by  certain  private  understandings  between  the  parties, 
intended  to  limit  its  operations,  but  it  was  apparently  unqualified. 
Every  blank  space  in  the  fonn  was  open.  To  all  appearances,  any 
sum  that  should  be  required  by  the  Government  might  be  desig- 
nated as  the  penalty,  and  the  names  of  any  persons  signing  as  co- 
sureties might  be  inserted  in  the  space  left  for  that  purpose.  It  was 
easy  to  have  limited  this  authority  by  filling  the  blanks,  and  the  fill- 
ing of  any  one  was  a  limitation  to  that  extent.  By  inserting,  in  the 
appropriate  places,  the  amount  of  the  penalty  or  the  names  of  the 
sureties  or  their  residences,  Butler  could  have  taken  away  from 
Emery  the  power  to  bind  him  otherwise  than  as  thus  specified. 
This,  however,  he  could  not  do.  Instead,  he  relied  upon  the  good 
faith  of  Emery,  and  clothed  him  with  apparent  power  to  fill  all  the 
blanks  in  the  paper  signed,  in  such  appropriate  manner  as  might  be 
necessary  to  convert  it  into  a  bond  that  would  be  accepted  by  the 
Government  as  security  for  the  performance  of  his  contemplated 
official  duties.  It  is  not  pretended  that  the  acts  of  Emery  are 
beyond  the  scope  of  his  apparent  authority.  The  bond  was  ac 
cepted  in  the  belief  that  it  had  been  properly  executed.  There  is 
no  claim  that  the  officer  who  accepted  it  had  any  notice  of  the  pri- 
vate agreements.  He  acted  in  good  faith,  and  the  question  now  is, 
which  of  two  innocent  parties  shall  sufifer.  The  doctrine  of 
Dair's  case  is  that  it  must  be  E»utler,  because  he  confided  in  Emery 
and  the  Government  did  not.  He  is,  in  law  and  equity,  estopped 
by  his  acts  from  claiming,  as  against  the  Government,  the  benefit 
of  his  private  instructions  to  his  agent. 

The  judgment  is  affiiTned. 


'252  GUARA^•T^'  .\xn  suretysiitp- 

Stonf.r  ?'^.  Mii.LiKiN,  ct  al.  (1877). 
85   111.  218. 

.1//'.  llarvcy  Pasco,  for  the  a])])cll;iiU. 
Mr.  A.  B.  Biiiin,  for  the  appellees. 

Mr.  Chikf  Ju.sticf.  Siiki.do.n  delivered  the  opinion  of  the 
'Court : 

At  the  h'ebruary  term.  1874,  of  the  cotinty  court  of  Macon 
'County,  a  judgment  was  entered  by  confession,  in  favor  of  Millikin 
&  Co.,  against  Thomas  L.ee,  John  Lee  and  Andrew  J.  Stoner,  for 
$453.33.  upon  a  promissory  note  with  a  warrant  of  attorney 
attached,  purporting  to  be  executed  by  the  three  latter,  dated  the 
24th  day  of  June,  1873.  payable  ninety  days  after  date  to  H  Crea, 
and  assigned  by  him  without  recourse. 

An  execution,  issued  upon  the  judgment,  was  levied  upon 
personal  properi'ty  of  John  Lee,  sufficient  in  value  to  satisfy  it. 
Afterward,  by  direction  of  Millikin  &  Co.,  the  sherifif  released  the 
pro])erty  of  John  Lee  from  the  levy,  and  levied  the  execution  upon 
certain  real  estate  of  Stoner,  and  the  bill  in  this  case  was  filed  by 
Stoner  to  enjoin  the  sale  of  his  property  imder  the  execution. 

The  court  ])elo\v,  upon  final  hearing  on  proof,  dismissed  the 
bill,  and  the  complainant  api)calcd. 

1lie  chief  ground  relied  u])on  in  sujiport  of  the  l)ill  is,  that  the 
signature  of  the  name  of  John  Lee  to  the  note  is  a  forgery.  The 
note  is  a  joint  and  several  one,  the  signature  of  Stoner  being  last 
upon  the  note.  He  testifies  that  Thomas  Lee  applied  to  him  to 
sign  the  note  as  his  security;  that  he  refused  to  do  so  unless  Lee 
would  first  get  his  brother.  Jolin  Lee,  to  sign  the  note;  that  Lee 
went  away  saying  he  would  go  and  get  John  to  sign  it;  that  the 
next  day  he  came  back,  saying  that  he  had  got  John  to  sign  it,  and 
presented  the  note  with  the  signature  of  John  Lee  appearing  to  it, 
and  witness  then  signed  it,  supposing  the  signature  of  John  Lee  to 
be  genuine,  knowing  him  to  be  resj)onsible.  and  had  he  not  sup- 
posed the  note  to  have  been  signed  bv  John  Lee.  he  would  not 
have  exectited  it.  Thomas  Lee  had  made  the  arrangement  before- 
hand with  Millikin  &  Co..  to  lend  him  the  money.  H.  Crea,  the 
payee  of  the  note,  was  but  nominally  such,  Millikin  &  Co.,  being  the 
real  payees,  and  on  presentment  of  the  note,  with  Crea's  indorse- 


STONER  VS.    :.Iirj,IKlN.  253- 

nient  on  it,  by  Thomas  Lee  to  Millikin  &  Co.,  who  were  bankers, 
they  discounted  the  note,  payint;-  the  proceeds  to  Thomas  Lee. 

The  bill  alleges,  the  way  John  Lee's  property  came  to  be  re- 
leased was,  that  he  made  an  affidavit  that  he  never  signed  the  note 
and  that  his  signature  to  the  same  was  a  forgery,  and  that  upon  the 
making  of  such  affidavit  Millikin  &  Co.  caused  his  property  to  be 
released  from  the  levy.  Although  it  is  this  forgery  which  is  mainly 
relied  on  for  the  discharge  of  .S toner,  it  is  yet  objected,  as  against 
the  release  of  John  Lee's  property  and  the  levy  on  Stoner's,  that 
there  is  no  proof  of  the  forgery,  more  than  this  affidavit.  Upon  an 
examination  of  the  bill,  we  take  that,  as  alleging  the  fact  of  the 
forgerv :  and  the  answer  of  Millikin  &  Co.  and  the  sheritT  admits 
the  same.  Bv  the  pleadings,  the  forgery  must  be  considered  an 
admitted  fact  in  the  case.  The  confession  of  judgment,  then,, 
against  John  Lee,  was  unauthorized,  and  a  nullity,  and  his  property 
was  rightly  released  from  the  levy  under  the  execution. 

Why  should  t'.iis  forgery  operate  in  discharge  of  Stoner,  and 
entitle  him  to  have  his  property  exempted  from  sale  on  the 
execution  ? 

It  may  have  been  a  wrong  tow^ard  him,  and  have  caused  him 
to  incur  a  greater  extent  of  liability  than  he  expected ;  and  the 
supposed  obtaining  of  the  execution  of  the  note  by  John  Lee  may 
have  been  the  sole  condition  upon  which  he  signed  his  name  to  the 
note.  Yet,  on  satisfactory  evidence  to  himself,  in  that  respect,  he 
did  place  his  name  unconditionally  to  the  note  as  a  maker  thereof, 
and  left  it  with  Thomas  Lee  to  deliver  to  A'lillikin  &  Co.,  knfbwing 
that  on  the  faith  of  his,  Stoner's,  promise  to  repay  it,  they  would 
part  with  their  money  to  Thomas  Lee.  There  is  no  just  reason 
why  this  promise  to  Millikin  &  Co.  should  not  be  kept. 

Whatever  of  wrong  there  was  to  Stoner,  was  perpetrated  by 
his  co-maker,  Thomas  Lee.  Millikin  &  Co.  were  wholly  innocent 
in  the  matter ;  they  Iiad  no  notice  of  anything  which  had  been  trans- 
piring among  the  makers  of  the  note,  as  between  themselves.  Nor 
was  it  incumbent  upon  Millikin  &  Co.  to  exercise  care  over  the 
interest  of  the  surety  in  the  note,  look  to  the  inducement  which  led 
him  to  become  such,  and  see  that  it  should  not  fail.  They  had  but 
to  watch  over  their  own  interest,  an<l  see  that  the  security  offered 
was  a  sufficient  protection  for  them.  For  the  lack  of  the  vigilance 
they  failed  to  exercise  in  this  respect,  they  suffer  the  full  conse- 
quence in  the  loss  of  the  security  of  the  name  of  John  Lee.     What- 


:254  GUARANTY   AND   SURKTVSHIP. 

ever  of  fraud  and  deception  the  co-makers  of  the  note  practiced 
toward  one  another,  was  their  own  sole  concern,  and  the  conse- 
quence, so  far  as  may  affect  them  in  their  relation  to  each  other, 
should  be  borne  by  themselves  alone.  There  is  no  justice  in  re- 
quiring Millikin  &  Co.  to  assume  the  risk  of  such  conduct,  and  no 
sound  principle  upon  which  they  should  be  made  to  suffer  loss 
because  of  it,  not  being  privy  thereto. 

York  County  A[.  F.  Insurance  Co.  v.  Brooks,  51  ^le.  506,  and 
Sclser  V.  Brock,  3  Ohio  St.  302,  are  direct  authorities  to  the  point 
that  such  a  forgery  of  the  name  of  a  prior  surety  \\\\\  not  discharge 
a  subsequent  surety.     See  Young  et  al.  v.  Ward,  21  111.  223. 

We  regard  the  language  of  Lord  Holt,  in  Hern  v.  Nichols,  i 
Salk.  289.  as  applicable,  that  "Seeing  diat  somebody  must  be  a  loser 
by  this  deceit,  it  is  more  reason  that  he  that  employs  and  puts  trust 
and  contidence  in  the  deceiver  should  be  a  loser,  than  a  stranger." 

The  case  of  Seely  v.  Tlie  People,  27  111.  173.  is  departed  from 
so  far  as  it  conflicts  with  the  principle  of  the  present  decision. 

We  are  satisfied  with  the  decree,  and  it  is  affirmed. 

Decree  affirmed. 


Deerixg  z's.  Moore  (1893). 
86  ^le.  i8t  :  29  Atl.  988. 

Geo.  C.   Hopkins,  for  plaintiff'. 

C  P.  Mattocks  and  L.  Burton,  for  defendants. 

HASKEr.L,  J.  Debt  by  an  obligee  against  a  surety  upon  two 
bonds,  given  by  a  collector  of  taxes  for  the  years  1884  and  1885, 
respectively.  The  last  bond  was  not  signed  by  the  pri^ncipal.  Each 
surety  bound  himself  severally,  and  not  jointly,  in  the  sum  of 
$5,000.  The  obligee  received  from  two  sureties  a  sum  of  money, 
"in  full  discharge  from  Hability  upon  eacli  bond."  Two  questions 
are  presented : 

T.  Did  the  failure  of  the  principal  to  sign  the  last  l)ond  render 
it  void  ?  We  think  not.  The  bond  was  conditioned  that  the  prin- 
cipal should  faithfully  perform  official  duty.  This  he  was  bound 
bv  law  to  do,  just  as  effectually  as  if  he  had  covenanted  to  do  it 


DEERING  VS.   MOORE.  255 

by  signing  the  bond.  The  engagement  of  the  surety,  therefore, 
rested  upon  the  legal  obligation  of  the  principal  alrleady  incurred. 
It  is  not  like  the  cases,  often  referred  to,  where  no  obligation 
attaches  to  the  principal,  outside  of  the  bond  itself.  In  those  cases, 
the  principal  not  being  bound,  it  would  be  unjust  to  hold  the 
surety.  Nor  is  it  like  the  case  of  bail,  where  the  sureties  have 
peculiar  rights  flowing  from  the  stipulation  agreed  to  by  the  prin- 
cipal. The  bond  must  be  held  good  at  common  law.  Hotuard  v. 
Brown,  21  Maine,  385;  Scarborough  v.  Parker,  53  Maine,  252; 
Goodyear  Co.  v.  Bacon,  T48  Mass.  542. 

II.  Did  the  discharge  of  two  sureties  release  the  defendant, 
another  surety?  No.  The  defendant  was  one  of  six  sureties, 
who  bound  themselves  severally  and  not  jointly,  each  in  the  sum 
of  $5,000.  Their  relations  to  each  other  are  precisely  the  same  as 
if  each  one  had  executed  a  separate  bond.  They  are  neither  neces- 
sarily joint  debtors,  nor  joint  sureties.  Had  the  principal  executed 
the  bond,  he  would  have  bound  himself  in  the  sum  of  $30,000.  The 
sureties,  instead  of  standing  in  jointly  for  that  amount,  divided  it 
equally  among  them,  and  each  one  became  se^'erally  bound  for  his 
aliquot  share.  They  are  sureties  for  the  principal,  and  may  or  may 
not  be  called  upon  to  bear  a  common  burden,  as  circumstances  may 
require.  If  they  are,  (that  is,  if  the  whole  liability  be  less  than 
the  aggregate  amount  assumed  by  all  of  them,  it  becomes  a  com- 
mon burden,  not  b}'  reason  of  any  contract  or  engagement  to  in- 
demnify each  other,  but  on  the  principle  of  equity,  that  a  common 
burden  shall  be  equally  borne  by  all,)  they  become  co-sureties,  and 
stand  in  relation  to  each  other  as  joint  debtors,  and  are  bound  to 
contribute  to  each  other,  so  that  they  shall  all  fare  alike.  In  cases 
of  this  sort,  of  course,  none  can  be  charged  beyond  the  amount  that 
he  has  stipulated  for.  JVarner  v.  Morrison,  3  Allen,  567.  It  fol- 
lows, therefore,  that  the  release  of  one  would  work  the  release  of 
all.  That  is  based  upon  the  presumption  of  payment,  the  seal 
being  conclusive  evidence  of  complete  and  ample  consideration.  To 
work  the  discharge  of  a  debtor,  the  agreement  must  be  made  upon 
sufficient  consideration,  and  that  pays  the  debt.  At  common  law, 
the  part  payment  of  a  debt  is  not  sufficient  consideration  for  its 
discharge.  Bailey  v.  Day,  26  Maine,  88 ;  Potter  v.  Green,  6  Allen, 
442.  If  the  discharge  be  by  a  sealed  instrument,  it  is  of  no  con- 
sequence what  the  actual  consideration  may  be,  for  the  seal  is  con- 
clusive evidence  of  sufficient  consideration.  By  the  statute  of  this 
State,  passed  in  1851,  c.  213,  R.  S.,  c.  82,  §  45.  the  settlement  of  a 


256  GUARANTY  AND  SURETYSHIP- 

demand  ii])on  the  receipt  of  money  or  (jtlier  valuable  consideration, 
however  small,  will  bar  an  action  nix)n  it.  It  should  he  obsers'ed 
that  the  demand  must  be  settled,  in  order  to  effectuate  that  result. 
The  discharg-e  of  a  debtor  from  liability  upon  a  demand  that  is  to 
remain  outstanding  will  not  so  operate.  This  distinction  applies 
where  one  or  two  joint  debtors  is  discharged  u])on  the  considera- 
tion of  part  pa\aiient,  leavhig  the  demand  outstanding  against  the 
other.  Such  discharge  will  not  bar  an  action  against  both ;  nor  can 
it  be  pleaded  by  the  other  in  an  action  against  him,  if  the  liability 
be  several.  Bank  v.  Marshall,  73  ^faine,  79;  Drinkz^'atcr  v.  Jor- 
da>i,  46  Maine,  432:  McAllcster  v.  Spragne,  34  Maine,  296. 

In  the  case  at  bar,  the  attempted  discharge  of  some  of  the 
sureties  is  not  pretended  to  have  been  by  a  sealed  instrument.  Had 
it  been,  it  would  have  W'orked  a  discharge  of  all  the  sureties,  for 
they  stand  in  the  relation  to  each  other  of  joint  debtors,  being  co- 
sureties for  the  payment  of  the  same  debt.  Xor  does  it  pretend  to 
have  discharged  the  ^vhole  debt,  as  provided  for  by  statute.  It 
simply  presumes  to  discharge  some  sureties  from  a  liability  or  debt 
that  was  to  remain  outstanding,  and,  therefore,  not  being  upon 
sufficient  consideration  that  would  have  paid  the  debt,  or  so  much 
of  it  as  they  had  engaged  to  pay  by  their  covenant,  nor  evidenced 
by  a  sealed  instrument,  it  was  ineffectual  to  discharge  any  one. 

The  result  is,  damages  upon  the  last  bond  should  be  assessed 
in  a  sum  equal  to  the  existing  default  of  the  principal,  with  inter- 
est from  the  time  it  accrued,  leaving  the  defendant  to  such  claims 
for  contribution  as  shall  prove  just. 

Defendant  defaulted.     Damages  to  be  assessed  below. 


DoDD  vs.  Winn  0858). 
27  Mo.  501. 

This  was  an  action  in  favor  of  Levi  Dodd  against  Isham  O. 
Winn  on  a  promissory  note  executed  by  David  C.  Glascock,  M. 
McDonald,  R.  l^".  Richmond,  Minor  J.  Winn.  James  G.  Caldwell 
and  said  Isham  ().  Winn.  The  jury  found  the  following  special 
verdict:  "W'e,  the  jury,  find  a  special  verdict  as  follows:  On  the 
6th  (lav  of  Aj:)ril,  1849,  the  plaintiff  Dodd  sued  Minor  J.  Winn, 
on  the  same  note  now  sued  on,  before  the  recorder  of  the  city  of 


DODD  VS.   WINN.  257 

Hannibal,  the  said  Minor  being  one  of  the  obHgors  in  the  note. 
Said  Dodd  recovered  a  judgment  before  said  recorder  against  said 
Minor  on  the  6th  day  of  April,  1850;  and  an  executioiii  was  issued 
by  said  recorder  on  said  judgment  on  the  itth  day  of  April,  1850, 
and  placed  in  the  hands  of  the  marshal  of  said  city,  and  by  him 
levied  on  a  house  in  said  city  as  die  property  of  Minor  J.  Winn ; 
that  said  marshal  advertised  said  house  for  sale  undeii  said  execu- 
tion, but  did  not  sell  the  house,  being  ordered  by  the  plaintiff's 
counsel  to  tear  down  the  advertisements  and  return  the  execution 
"no  property  found;"  which  he  did;  and  no  execution  has  since 
issued  on  said  iudgiuent  by  the  recorder.  The  jury  further  find  as 
follows,  that  when  the  marshal  levied  on  the  house  as  aforesaid,  a 
part  of  said  house  was  owned  bv  said  Minor  J.  Winn,  which  part 
so  owed  by  him  was  worth  the  sum  of  $137.50.  Said  house  was 
standing  on  a  piece  of  ground  owned  by  Jeremiah  Strode,  who  had 
leased  it  to  said  Minor  J.  Winn,  with  the  privilege  of  taking  off 
when  he  pleased  any  house  he  might  erect  thereon.  Minor  J. 
Winn  had  built  the  house  in  question  on  said  lot,  but  had  sold  a 
part  of  it  before  the  execution  was  levied  as  before  stated.  The 
jury  further  find  that  David  O.  Glascock  was  the  principal  in  the 
note  sued  on,  and  that  Minor  J.  Winn  and  Tsham  O.  Winn  were 
each  securities  for  said  Glascock." 

The  court  rendered  judgment  on  this  verdict  in  favor  of 
plaintiff'  for  eighty  dollars  debt  (four-fifths  of  the  amount  of  the 
original  note  sued  on ) ,  and  assessed  the  damages  for  the  detention 
thereof  at  seventy-six  dollars. 

Lamb  &  Lakciiaii,  for  plaintiff  in  error. 
Porter  &  Harrison,  for  defendant  in  error. 

Ricii.\RD.soN,  Judge,  delivered  the  opinion  of  the  court. 

The  law  is  well  settled  that  a  valid  agreement  between  the 
creditor  and  the  principal  debtor  to  extend  the  time  of  pavment, 
or  any  improper  interference  by  the  creditor  \vith  the  process  of 
law  after  the  commencement  of  a  suit,  by  which  the  surety  may 
be  injured  or  subjected  to  greater  risk,  or  be  delayed  in  the  right 
on  payment  of  the  debt  to  proceed  against  the  principal,  if  made 
or  done  without  the  assent  of  the  surety,  will  discharge  him  from 
his  liability;  (24  Mo.  333;  26  AIo.  243;)  and  the  rielation  of  prin- 
cipal and  surety  or  of  co-sureties  is  not  extinguished  bv  judgiiient. 
Rice  V.  Morton,  19  Mo.  263.     A  release  of  the  principal  will  dis- 


258  GUARANTY   AND  SURETYSHIP- 

charf:;-e  the  surety,  but  one  surety  may  be  discharg-ed,  witliout 
prejucHce  to  an  action  ag^ainst  the  others,  to  the  extent  that  they 
would  l)e  lia.hle  in  a  suit  for  contril)uli<in  l)el\veen  themselves. 
Ronton  V.  Lac\,  ly  Alo.  ^(ji).  '!'he  crcditni-  can  not,  liy  (hschargino- 
one,  increase  the  liabilit\  of  the  other;  and  lie  will  not  be  allowed, 
bv  discharq^inj^  one,  to  impose  on  the  other  a  greater  projwrtion  of 
a  common  burden  than  in  equity  he  ought  to  bear.  At  law.  if  there 
are  several  sureties  and  one  is  insolvent  and  another  pays 
the  whole  debt,  he  can  only  recover  against  the  solvent 
sureties  their  pro  rata  part  as  if  all  of  them  were  solvent;  but  the 
rule  in  equity  is  luorc  just  and  reasonable,  and  the  insolvent's 
share  is  apportioned  among  those  who  are  solvent,  i  Story  Eq. 
§  498.  The  eighth  section  of  om-  statute  concerning  securities 
provides  that  one  surety  at  the  suit  of  another  shall  not  be  liable  to 
pav  more  than  his  due  pro])ortion  of  the  original  demand,  but  what 
is  his  due  proportion  will  vary  according  to  the  circumstances. 
Thus,  if  there  are  three  sureties,  and  all  of  them  are  solvent,  and 
one  pays  the  debt,  each  of  the  others  will  be  liable  to  him  for  one- 
third  of  the  amount  only :  but  if  one  of  them  is  insolvent,  the  other 
will  he  lial)le  for  one-half. 

In  this  case  it  seems  that  Glascock  was  the  principal  debtor, 
and  that  the  other  five  parties  to  the  note  were  sureties.  Now  if 
all  the  sureties  were  solvent,  and  the  defendant  paid  the  debt,  he 
could  only  re(|uire  ]\I.  J.  \Vinn  to  contribute  one-fifth  part  of  it, 
and  there  fo-re  could  only  ask  to  have  one-fifth  abated,  and  could 
only  complain  of  the  conduct  of  the  plaintiff  in  releasing  the  levy 
of  the  execution  to  that  extent.  But  if  the  other  sureties  are  insol- 
vent, M.  J.  Wimi  would  be  bound  to  contribute  to  the  defendant 
one-half  instead  of  one-fifth  of  the  debt ;  in  which  case,  if  the 
plaintifT  had  released  Al.  J,  Winn,  he  could  only  demand  of  the 
defendant  the  other  moiety  :  and,  on  principle,  the  same  result  must 
follow  if  he  could  have  made  half  the  debt  but  for  his  improper 
interference  with  the  execution.  These  questions  can  not  be  deter- 
mined frcjin  the  meagre  statement  of  facts  in  the  special  verdict. 
It  does  not  a]jpear  whether  the  other  sureties  were  solvent  or  not. 

The  .statute  authorizes  this  court  to  remand  a  cause  wdien 
the  facts  in  a  special  verdict  are  insufficiently  found;  (2  R.  C. 
I'^S.S'  P-  130I'  §  35.')  '^11*'  t'^^  judgment  then  will  be  reversed  and 
the  cause  remanded;  Judge  Napton  concurring.  Judge  Scott  not 
sitting. 


prior  vs.  williams.  259 

Prior  z's.  Williams  (1866.) 
3  Abb.  App.  624. 

Horace  Prior  and  James  Prior,  as  executors  of  Henry  Prior, 
deceased,  brougbt  an  action,  in  the  New  York  superior  court, 
against  Gibson  T  Williams,  Harriet  H.  Chamberlin  and  William 
B.  Chamberlin,  in  which  they  asked,  as  subsequent  mortgagees, 
to  be  allowed  to  i^edeem  certain  premises  in  the  city  of  Buffalo, 
owned  by  Harriet  H.  Chamberlin,  from  the  lien  of  a  mortgage 
held  by  Williams.  They  also  asked  that  the  mortgage  under 
which  they  claimed  might  be  reformed. 

The  facts  of  the  case  were,  that  William  B.  Chamberlin,  son 
of  Harriet  Chamberlin,  being  a  member  of  the  firm  of  Prior,  Hol- 
comb  &  Co,  doing  business  in  New  York,  had  induced  his  mother 
to  indorse  certain  notes  in  blank,  upon  the  agreement  that  they 
were  to  be  signed  by  the  firm  and  used  in  their  business.     One  of 
these  notes,  for    fifteen    hundred    dollars,  at    three    months,    he 
(William  H.  Chamberlin)   signed  with  his  own  individual  name, 
and  negotiated  to  Plenry  Prior,  brother  of  the  Horace  Prior  of  his 
firm.     On  the  note  falling  due,  TTenry  Prior  agreed  to  extend  the 
time  for  payment  to  one  year,  provided  he  were  secured  by  a  mort- 
gage on  Mrs  Chamberlin's  property  in  Buffalo,     A  mortgage  was 
accordingly  made  by  Mrs.  Chamberlin  to  meet  the  wishes  of  Henry 
Prior.     By  a  mistake,  however,  the  mortgage  was  made  to  Horace 
Prior,  and  the  note,  to  secure  the  payment  of  which  the  mortgage 
was  made,  was  described  as  being  payable  "one  year  after  the  date 
thereof,"  instead  of  three  months  after  date.     The  false  descrip- 
tion of  the  note  was  not  noticed,  and  the  mortgage  was  assigned 
by  Horace  Prior  to  Henry  Prior,  and  held  by  him  up  to  the  time 
of  his  death,  and  after  that  by  his  executors,  until  the  property  on 
which  it  was  given  being  about  to  be  sold  under  the  foreclosure 
of  a  prior    mortgage,  they  brought  this    action  to  be    allowed  to 
redeem,  and  to  have  their  mortgage  reformed  by  having  the  words 
•'one  year  after  date  thereof,"  in  the  description  of  the  note,  stricken 
out,  and  the  words  "three  months  after  date  thereof"  inserted. 

The  referee  reported  in  favor  of  plaintiffs,  and  the  judgment 
thereon  was  affirmed  by  the  court  at  general  term.  Defendants 
appealed  to  this  court. 

J.  D.  H.  Chamberlin,  for  defendants,  appellants. 
IVilliam  Dorsheimer,  for  plaintiffs,  respondents. 


260  GUARAXTV    AND  SURETYSHIP- 

Pi-X'KHAM.  /.  The  only  point  made  by  the  appellants  re- 
quinng  examination  is,  whether  this  mistake  in  this  nn)rtgage  can 
be  corrected  by  the  court,  as  the  mortgagor  was  a  mere  surety. 

The  appellant  does  not  urge  that  the  mortgage  is  already 
sufficient,  as  perhaps  she  might.  See  Jackson  v.  Boivcn,  y  Cow. 
13.  and  cases  cited. 

Counsel  referred  to  the  remarks  of  the  chancellor  of  Ontario 
Bank  v.  Mnniford,  2  Barb.  596,  at  613.  It  is  true  the  chancellor 
used  language  which  the  case,  as  finally  disposed  of,  did  not 
require.  He  remarked  that  a  bond  could  not  be  reformed  as 
against  a  surety,  "even  though  it  was  his  intention  to  bind  himself 
at  the  time  the  bond  was  executed,  h'or  the  statute  of  frauds 
requires  an  agreement  in  writing  to  bind  a  surety,  and  if  the  surety 
has  not  already  executed  a  valid  agreement  to  answer  for  the  debt 
or  default  of  his  principal,  this  court  cannot  compel  him  to  execute 
such  an  agreement,  upon  the  ground  that  he  has  attempted  to  do 
so,  but  has  failed  of  accomplishing  his  object  by  mistake  or  inad- 
vertence." 

With  deference,  I  do  not  think  it  an  answer  to  a  bill  for  the 
refonnation  of  an  instrument,  that  it  would  have  been  invalid  if 
not  in  wTiting,  and  that,  therefore,  it  cannot  be  reformed.  Upon 
such  a  doctrine,  a  deed  of  land  or  a  mortgage  could  not  be  reformed 
even  against  a  principal,  because  either  is  invalid  if  not  in  writing. 

A  party  sells  a  farm  of  one  hundred  acres,  l)ut  li\'  a  mistake, 
of  tne  scrivener  the  deed  conveys  but  fifty.  The  mistake  is  not 
discovered  until  after  the  deed  is  accepted  and  the  nioney  paid  by 
the  grantee.  This  doctrine  would  prevent  the  reformation  of  that 
deed.  'J'he  right  to  grant  relief  in  such  a  case  will  scarcely  be 
denied.  But  the  proof  of  the  case  must  be  entirely  clear  and  sat- 
isfactory. 

In  Phelps  V.  Gnrroz^',  8  Paige,  322,  where  one  Smith  had  pur- 
chased goods  of  the  plaintiffs  imder  an  agreement  to  give  Gar- 
row's  indorsement  on  their'  draft  on  Smith  therefor,  payable  to 
Garrow's  order,  the  draft  was  made  and  indorsed  accordingly. 
Garrow  took  up  the  draft  and  then  brought  his  action  against  the 
plaintiffs  as  drawers.  They  then  filed  their  bill  against  Garrow 
to  restrain  the  further  prosecution  of  that  suit,  not  to  reform  the 
draft.  The  court  dismissed  the  cf)ni])laint,  holding  that  Garrow 
was  not  liable  either  at  law  or  in  e(|uity,  though  he  admitted  that 
he  intended  to  become  liable  by  indorsing  the  draft. 

The  courts  now  would  hold  him  lia1)le  under  such  facts  at  law. 


PRIOR   VS.    W  ILLIAMS.  261 

There,  however,  was  no  mistake  of  fact,  and  courts  have  frc- 
C[uently  recog^nized  tlie  force  of  a  distinction  Ijetwcen  a  mutual 
mistake  of  law  and  of  fact,  althoug'h,  as  a  general  rule,  there  is 
little  g-round  for  the  distinction.  In  most  cases  there  is  as  good 
ground  for  relief  when  both  parties  have  acted  under  a  mistake  of 
the  law,  as  there  is  where  the  mistak'e  is  confined  to  the  fact. 

The  mistake  found  here  is  one  of  fact.  The  other  cases  cited 
b}-  the  appellants  of  JValsli  v.  Bailie,  lo  Johns,  i8o;  Dobbin  v. 
Bradley,  17  Wend.  422;  JTiiiL^  r.  Terry,  5  Hill,  160;  Birckhead  v. 
Brown,  Id.  634,  onl}'  illustrate  the  extreme  strictness  with  wh.ich 
contracts  of  sureties  are  construed,  and  that  they  will  not  be 
extended  beyond  their  letter.  They  have  no  pertinence  to  the 
question. 

The  power  of  a  court  of  equity  to  reform  an  instrument  as 
against  a  surety  is  fully  recognized  and  declared  in  Story  Eq.  vol. 
L  §   '64. 

In  Wiser  v.  BlaehJey,  i  Johns.  Ch.  607,  where  a  bond  given 
by  a  surety  far  tlie  guardian  of  an  infant  was  taken  by  the  surro- 
gate in  the  name  of  the  people,  instead  of  the  infant,  the  court  cor- 
rected the  mistake, — the  cliancellor  remarking  that  he  had  no 
ditficulty  in  saying  that  it  was  witliin  the  ordinary  jurisdiction  of 
that  court  to  correct  such  a  mistake  by  holding  the  party  acord- 
ing  to  his  original  intentions.  That  was  in  harmony  wdth  good 
morals  as  well  as  with  sound  law. 

So  in  Weaver  v.  SJiyroek,  6  Serg.  &  R.  262,  964.  Tilgh^ian, 
Ch.  J.,  affirmed  the  same  doctrine  as  against  a  surety. 

-Many  cases  may  be  conceived  where  the  grossest  injustice 
would  result  if  courts  had  no  power  to  correct  mistakes  as  against 
sureties.  Alistakes  are  as  likely  to  occur  with  them  as  with  others, 
and  there  is  no  sound  principle  that  prevents  their  being  com- 
pelled to  act  justly  and  honestly.  Where  the  surety  is  aware  of 
and  assents  to  the  pur'pose  to  which  his  obligation  is  to  be  applied, 
and  it  is  so  used,  though  without  consideration  except  that  ad- 
vanced to  the  principal,  equity  will  reform  any  mistake  of  fact  so 
that  the  obligation  shall  fulfill  its  purpose. 

In  the  case  at  bar,  from  the  facts  disclosed,  the  testator  would 
probably  have  been  able  to  collect  his  note  at  maturity  had  he  not 
relied  upon  the  mortgage.  Upon  the  mortgage  nine  months' 
longer  time  was  procured  with  the  knowledge  of  the  mortgagor. 
It  was  given  by  her  for  that  precise  purpose,  and  so  accepted  by 
the  mortgagee.     If  by  mistake  in  the  description  of  the  note  or  by 


262  GUARANTY   AXD   SURETYSHIP. 

any  clher  mistake  therein  misleading-  the  mortg-agee,  it  has  failed  to 
execute  its  purpose,  the  cotirts  have  the  power,  and  we  think  it 
their  duty  to  reform  the  instrument  so  as  to  carrv  out  the  intent 
of  the  parties. 

The  judgment  of  the  court  below  should  be  affirmed. 

Note— The  concurring  opinion  of  \Vri<;ht,  J.,  is  omitted. 


Emmer'1'  z's.  Ttiomi'SOn   (1892). 
49  Minn.  386;  52  N.  W.  31. 

Appeal  from  district  court.  Xobles  county:  Browx,  Judge. 

Action  by  Joseph  Emmert  against  Peter  Thompson  and 
others.  From  a  judg-ment  for  defendants,  plaintiff  appeals. 
Affirmed. 

Daniel  Rolircr,  for  appellant. 

IVavncr,  Richardson  &  Lazvrencc  and  G.  W.  Wilson,  for 
respondents. 

Collins,  J.  When  the  loan  of  monev  was  made  by  defendant 
Cornwell  to  defendant  Marr,  to  secure  which,  as  agreed  uix)n,  the 
latter  mortgaged  his  entire  farm,  consisting  of  240  acres,  it  was 
for  the  stii)ulated  purpose  of  relieving  one  tract  (160  acres)  from 
the  trust  deed  held  by  Ormsby,  the  balance  (80  acres)  from  the 
Hayes  mortgage,  and  the  entire  farm  from  delinquent  taxes.  The 
trust  deed,  the  mortgage  last  referred  to,  and  the  taxes  were  repre- 
sented to  l)e,  and  in  fact  were,  first  liens  upon  the  pr*emises ;  and 
Cornw^ell  believed,  and  it  was  implied  from  what  Marr  stated  when 
applying  for  the  loan — there  were  no  other  incumbrances,  and  that, 
with  these  paid  off  and  discharged,  his  mortgage  would  take  their 
place,  and  become  the  first  and  only  charge  upon  the  property.  The 
taxes  and  the  amounts  due  on  the  incumbrances,  aggregating 
$1,434.82,  were  paid  out  of  the  proceeds  of  the  loan,  in  accordance 
with,  the  ag'reement  under  which  it  was  made.  I'roper  releases 
and  discharges  were  procured  and  at  once  recorded,  in  the  mistaken 
belief  on  the  part  of  Cornwell.  and  the  agents  who  transacted  the 
business,  that  there  was  no  other  or  prior  charge  upon  the  prem- 
ises.    P'or  some  time  thereafter  they  remained  in  ignorance  of  the 


EMMERT  VS.  THOMPSON.  263 

fact  that  plaintiff's  mortga^re  was  in  existence  and  of  record  when 
the  one  in  question  was  executed,  and  hy  their  acts  had,  of  record, 
become  the  senior  Hen.  As  Alarr  was  and  is  insolvent,  and  plain- 
tiff's mortgag-e,  with  costs  and  disbursements  of  foreclosure,  now 
exceeds  in  amount  the  value  of  the  farm  as  found  by  the  trial  court, 
the  seriousness  of  the  situation  is  quite  apparent.  The  court  be- 
low subordinated  the  plaintiff's  claim  to  that  of  defendant  Corn- 
well,  to  the  extent  of  the  payments  made  for  taxes,  and  to  satisfy 
and  extinguish  the  incumbrances,  reinstating  the  liens,  in  effect ; 
and  its  right  and  power  sO'  to  do  is  the  priiicipal  question  now  be- 
fore us. 

It  has  been  well  said  that  the  doctrine  of  subrogation  has  been 
steadily  growing  and  expanding  in  importance,  and  becoming  more 
general  in  its  application  to  various  subjects  and  classes  of  per- 
sons. It  is  not  founded  upon  contract,  but  is  the  creation  of  equity 
— is  enforced  solely  for  accomplishing  the  ends  of  substantial  jus- 
tice ;  and,  being  administered  upon  equitable  principles,  it  is  only 
when  an  applicant  has  an  equity  to  invoke,  and  where  innocent  per- 
sons will  not  be  injured,  that  a  court  can  interfere.  It  is  a  mode 
which  equity  adopts  to  compel  the  ultimate  payment  of  a  debt  by 
one  who  in  justice  and  good  conscience  ought  to  pay  for  it,  an;d  is 
not  dependent  upon  contract,  privity,  or  strict  suretyship.  Stevens 
V.  Goodenciigh,  26  Vt.  676;  Harnsherger  v.  Yancey,  33  Grat.  527; 
Smith  v.  Foran,  43  Conn.  244.  That  in  this  way  a  court,  under  a 
great  variety  of  circumstances,  may  relieve  one  who  has  acted 
under  a  justifiable  or  excusable  mistake  of  fact,  is  readily  conceded 
by  appellant ;  but  he  invokes  and  seeks  to  have  applied  to  respoud- 
ents'  case  the  general  rule  that  the  doctrine  of  subrogation  will  not 
be  exercised  in  favor  of  a  volunteer  or  a  stranger  who  officiously 
intermeddles,  such  as  a  person  who  pays  without  any  obligation  so 
to  do,  or  one  who,  without  any  interest  to  protect,  liquidates  the 
debt  of  another.  There  are  a  very  respectable  number  of  cases, 
several  having  been  cited,  in  which  relief  has  been  refused  under 
circumstances  precisely  like  those  now  before  us,  where  one  who 
has  loaned  and  used  his  money  in  good  faith,  and  for  the  express 
purpose  of  relieving  a  debtor  from  a  pressing  obligation,  and  his 
real  property  from  a  specific  lien  for  the  amount  of  the  same,  under 
a  genuine  but  excusable  misapprehension  as  to  the  rank  and  posi- 
tion of  security  taken  by  him  on  the  same  property,  has  been 
treated  and  characterized  as  a  volunteer,  a  stranger,  and  an  officious 
intermeddler,  and  denied  the  rights  of  an  equitable  assignee.     But 


204  GUARANTY  AND  SURETYSHIP. 

of  late  years,  with  the  develoj^nu'iil  of  tlic  ])rinciples  on  which  the 
doctrine  is  founded,  the  courts  haw  hcen  taking-  a  l)r()ader  and 
more  commendable  view  oi  the  situation  of  such  a  partv.  and  at 
this  time  very  little  is  left  of  the  views  expressed  in  the  earlier 
cases.  The  better  opinion  now  is  that  one  who  loans  his  money 
upon  real  estate  security  for  the  express  purpose  of  taking-  u])  and 
discharging^  liens  or  incumbrances  on  the  same  property  has  thus 
paid  the  de])t  at  the  instance,  request,  and  solicitation  of  the  debtor, 
expecting-  and  believing,  in  good  faith,  that  his  security  will,  of 
record,  be  substituted,  in  fact,  in  ])lace  of  that  which  he  discharges, 
is  neither  a  volunteer,  stranger,  nor  intemieddler,  nor  is  the  debt, 
lien,  or  incumbrance  regarded  as  extinguished,  if  justice  requires 
that  it  should  be  kept  alive  for  the  l)enefit  of  the  person  advancing 
the  money,  who  thereby  l)ecomes  the  creditor.  Of  the  many 
authorities  on  this,  we  cite  .Issocialioit  v.  'Jlioiiipsou,  32  X.  J.  Eq. 
133  :  Cans  v.  T/ucme,  93  N".  Y.  225  ;  Sidciicr  v.  farcy,  yy  Ind.  241  ; 
McKciiz'ie  v.  McKciizic,  52  Vt.  271  ;  Cobb  v.  Dyer,  69  Me.  494; 
Levy  v.  Martin,  48  Wis.  198,  4  N.  W.  Rep.  35;  Insurance  Co.  v. 
Aspinwall.  48  Mich.  238,  12  X.  W.  Rep.  214;  Crippen  v.  Chap- 
pel,  35  Kan.  4()5,  \\  Pac.  Rep.  453;  3  Pom.  Eq.  Jur.  1212:  ]  [ar- 
ris. .Subr.  81  [,  816;  Dixon,  Subr.  165. 

It  is  contended  by  appellant  that  Cornwell  nnist.  under  the 
circumstances,  be  declared  culpably  negligent  when  taking  his 
security  and  discharging  of  record  the  (  )rmsby  and  Hayes  liens; 
and,  further,  that,  as  the  plaintiff's  mortgage  was  then  of  record, 
he  had  notice  of  it,  in  contemplation  of  law,  and  could  not  have 
been  misled  or  mistaken.  Marr's  application  for  a  loan  was  for 
the  avowed  purpose  of  talcing  up  anrl  discharging  the  Ormsby  and 
Hayes  liens,  and  was  w  ell  calculated  to  convey  the  impression  that 
these  were  tlie  only  incumljrances.  He  intentionally  or  otherwise 
concealed  the  truth,  omitting  to  state  the  existence  of  a  junior  in- 
cumbrance in  a  large  amount,  a  kufnvledge  of  which  would  have 
ended  at  once  all  negotiations  with  Cornwell's  agents.  It  was 
misleading,  and  the  persons  last  named  were  not  negligent  because 
they,  to  some  extent,  relied  upon  and  were  misled  bv  it.  See 
NewcU  V.  Randall,  32  Minn.  171,  K)  X.  W.  Kep.  972.  It  is  a  com- 
mon thing  for  courts  of  equity  to  relieve  parties  who  have  by  mis- 
take discharged  mortgages  upon  the  record,  and  to  fully  protect 
them  from  the  consequences  of  their  acts,  when  such  relief  will  not 
result  ])reiudicially  to  tliird  or  innocent  persons.  Gcrdine  v.  Me)i- 
a^c,  41    .Minn.  417.  43   X.  W.  Rep.  or.     Parajihrasing  slightly  a 


EMMERT  VS.  TnOATPSON.  265 

remark  made  in  the  oi^inion  therein,  it  may  l)e  said  that,  consider- 
ing this  case  as  it  stands  hetween  the  appellant  and  respondent 
Cornwell,  it  is  ohvions  that  it  would  he  most  unjust  and  inequitable 
not  to  place  the  parties  in  statu  quo  with  respect  to  the  amounts 
paid  out  upon  liens  which  were  superior  to  that  held  by  plaintiff, 
now  being  foreclosed.  It  is  true  that  at  the  outset  the  mistake  grew 
out  of  an  error  in  the  abstract  Ijooks  kept  by  Cornwell "s  agents ; 
but  later,  when  examining  the  records  in  the  office  of  the  register 
of  deeds,  the  error  was  unnoticed  and  the  mistake  undiscovered. 
It  was  a  mistake  of  fact,  and,  in  our  judgment,  not  of  such  a  char- 
acter as  to  bar  the  respondents'  claim  to  equitable  relief.  That,  in 
a  proper  case  of  mistake  of  fact,  such  relief  may  be  afforded  not- 
withstanding the  intervening  mortgage  was  of  record  when  the 
error  was  committed,  is  well  settled.  Grib  v.  Reynolds,  35  Minn. 
331,  28  N.  W.  Rep.  923.  Cornwell  nu'sunderstood,  and  was  justi- 
fiably ignorant  of,  the  facts,  and  acted,  through  his  agents,  u])on 
the  assumption  that  he  and  they  knew  the  true  state  of  the  title 
when  the  liens  which  his  money  had  discharged  were  satisfied  of 
record,  and  plaintiff's  mortgage  advanced  to  the  position  of  the 
senior*  incumbrance,  without  a  single  act  of  his,  and  to  the  very 
great  detriment  of  the  person  who  had  brought  it  about.  The 
■court  was  right  in  applying  the  principle  of  subrogation,  or  "equit- 
able assignment,"  as  it  is  frequently  called. 

Judgment  was  entered  below,  directing  that  the  premises  be 
sold,  on  foreclosure  of  plaintiff's  mortgage,  as  one  farm,  and  that, 
out  of  the  net  proceeds,  there  he  first  paid  to  respondent  Cornwell 
the  sums  of  money  which  he  paid  out  as  taxes,  and  to  take  up  and 
satisfy  the  incumbrances  before  mentioned.  The  appellant's  coun- 
sel distinctly  approves  that  part  of  the  judgment  which  requires 
a  sale  of  the  premises  as  an  entirety,  but  makes  the  point,  in  case 
w^e  affirm  the  action  of  the  irial  court  on  the  main  question,  that  the 
farm  should  have  been  sold  subject  to  the  subrogator's  lien  for  a 
specific  sum  on  the  160  and  for  another  specific  sum  on  the  80 
acre  tract,  and  thus  tliere  would  have  been  avoided  the  possibility, 
vv^hich  he  now  suggests,  of  having  shifted  over  upon  one  of  these 
tracts,  to  some  extent,  a  burden  which  ought  to  wholly  rest  upon 
the  other.  It  is  evident  from  the  record  that  the  attention  of  the 
trial  court  was  not  called  to  this  point,  and  hence  the  order  that 
the  sale  be  of  the  whole  as  one  body  of  land.  But  we  are  unable 
to  see  how  the  result  now  suggested  by  counsel  w^ould  have  been 
avoided  by  the  adoption  of  his  plan  without  selling  the  tracts  sep- 


266  GUARANTY   .\Xn   Sl'KKTVSIIir. 

aratcly,  keeping-  the  funds  derived  from  each  distinct,  and  apply- 
ing- the  same  to  the  Hquidation  of  the  hens,  so  far  as  they  might 
go.  Counsel  does  not  contend  that  the  two  tracts  of  land  should 
have  been  sold  separately,  but,  as  before  stated,  indorses  the  judg- 
ment directing  a  sale  oi  7)iasse.  He  is  concluded  on  this  point  by 
his  position  as  to  the  manner  of  sale. 

Judgment  affirmed. 


Morgan  vs.  Wordkll   (1901). 
178  Mass.  350;  55  L.  R.  A.  33;  59  X.  E.  1037. 

Api'1':al  by  plaintiff  from  a  judgment  of  the  Superior  Court 
for  Bristol  county  in  favor  of  defendant  upon  an  agreed  state- 
ment of  facts  to  determine  the  liability  of  defendant  for  a  deb't 
which  he  owed  to  the  bankrupt.     Judgment  for  defendant. 

W'ordcU  and  Dillon  were  members  of  a  partnership  engaged 
in  the  dry  g-oods  business.  The  partnership  was  dissolved  by 
an  agreement  under  which  Dillon  purchased  the  interest  of  the 
copartners  and  agreed  to  pay  the  debts  of  the  firm.  Some  of 
these  debts  he  failed  to  pay.  After  the  dissolution  of  the  firm 
Wordell  bought  of  Dillon  goods  for  the  purchase  price  of  which 
this  sction  was  brought.  After  Dillon's  Bankruptcy,  defendant 
paid  claims  against  the  partnership  to  an  amount  exceeding  that 
which  he  owed  to  Dillon.  The  amount  so  paid  he  sought  to  set 
off  against  the  claim  of  the  trustee  for  the  purchase  jjrice  of  the 
goods. 

h'urther  facts  appear  in  the  opinion. 

Messrs.  Williani  M.  Morgan  and  Henry  T.  Richardsoji,  for 
appellant. 

Messrs.  John  IT.  Ciunniings  and  Charles  I\.  Ciinunings,  for 
appellee. 

HoLMics,  Ch.  J.,  delivered  the  o])inion  of  the  court: 

Ibis  is  a  suit  l)y  a  trustee  in  bankruplc}'  against  a  debtor 
of  the  bankrupt.  The  debtor  claims  a  set-off  on  the  ground  that 
since  the  bankruptcy  he  has  paid  debts  due  from  a  former  partner- 


MORGAN   VS.    WOPnKI.L.  267 

ship  consistino-  of  himself,  the  bankrupt,  and  one  McGuire,  from 
whicli  debts  the  bankrupt  had  covenanted  to  save  his  partners 
harmless.  It  is  objected  that  the  covenant  runs  to  the  two  other 
partners  jointly,  but  it  is  sufficiently  plain  that  there  are  several 
covenants  to  each.  The  more  serious  objection  is  that  the  prin- 
cipal debt  paid  is  one  which  has  been  disallowed  by  final  judg- 
ment when  offered  by  the  creditors,  H.  B.  Claflin  &  Co.,  for  proof 
against  the  estate,  on  the  ground  that  they  received  a  preference, 
and  that  a  claim  offered  in  the  defendant's  name  in  respect  of 
the  payment  also  has  been  disallowed. 

As  it  was  assumed  on  both  sides  that  the  provision  in  §  68^ 
of  the  United  States  bankruptcy  act  concerning  set-off'  is  more 
than  a  rule  of  procedure,  and  governs  in  this  court  as  well  as  in 
the  courts  of  the  United  States,  we  shall  make  the  same  assump- 
tion for  the  purposes  of  this  case,  without  argument.  See  Hunt  v. 
Holmes,  i6  Nat.  Bankr.  Reg.  loi,  105.  Fed.  Cas.  No.  6,890; 
Partridge  v.  Phoenix  Mnt.  L.  Ins.  Co.,  15  Wall.  573,  580,  21  L. 
ed.  229,  239.  We  shall  assume  further,  as  a  corollary,  that  if  a 
set-off  is  to  be  maintained  it  must  be  brought  within  the  words 
of  the  section  referred  to.  Those  words  are:  "A  set-off  or  coun- 
ter-claim shall  not  be  allowed  in  favor  of  any  debtor  of  the  bank- 
rupt which  (T)  is  not  provable  against  the  estate."  These  words 
are  universal  in  fomi,  and  we  do  not  see  how  a  set-off  can  be 
claimed  in  this  case  outside  of  them. 

If,  then,  the  defendant  claims  by  virtue  of  the  rights  of  a 
quasi  surety  {Fisher  v.  Tiift,  12'j  Mass.  313,  314)  who  has  paid 
and  therefore  is  subrogated  to  the  claim  of  a  joint  creditor  of 
himself  and  the  debtor  (§  57/),  the  trouble  is  that  he  has  to  take 
the  claim  of  Claflin  &  Co.  as  he  finds  it,  and  he  finds  it  a  claim 
which  is  not  provable  against  the  estate,  because  Claflin  &  Co. 
have  received  preferences  wdiich  have  not  been  surrendered.  Sec- 
tion 570-.  It  seems  hard  that  a  matter  between  Claflin  &  Co.  and 
the  bankrupt,  with  which  the  defendant  had  nothing  to  do-,  should 
bar  rights  arising  out  of  a  payment  which  he  was  compelled  to 
make.  But  we  do  not  feel  at  liberty  to  give  the  language  of  sec- 
tion 57/  other  than  its  most  natural  meaning,  or  to  interpret  the 
subrogation  there  provided  for  as  a  subrogation  free  from  the  dis- 
abilities attached  to  the  creditor,  or  as  a  subrogation  to  the  credi- 
tor's rights  independent  of  the  effect  of  the  preference  upon  them. 
One  result  of  such  an  interpretation  would  be  to  allow  the  claim 
without  a  surrender  of  the  preference,  contrary  to  §  570'. 


268  GUARANTY  AND   SURI.TVS tllP. 

It  is  sugg-estcd  that  the  adjiuhcation  against  Claflin  &  Co.  is 
res  niter  alios,  and  tlicre  is  no  other  evidence  that  they  accepted  a 
preference.  iUn  the  defendant's  claim  l)y  sul)n)<;ati()n  is  affected 
by  the  judgment  as  it  is  by  tlie  preference,  and  for  the  same  reason. 
He  stands  in  the  shoes  of  Claflin  &  Co.,  succeeds  to  their  place,  in 
the  language  of  th.e  Roman  law,  and  is  the  same  person  with  tliem 
for  tliis  purpose,  a  notion  frequently  recurring  in  the  law.  Der- 
nusson,  Subrogation,  3d  ed.  chap,  i ,  Xo.  7 ;  Sheldon,  subrogation, 
2;  4  Masse,  Droit  Commercial,  2d  ed.  chap.  60,  No.  2,125,  D.  20, 
4,  12,  §  9,  D  4,  12,  16.  See  Day  v.  Worcester,  N.  &  R.  K.  Co.,  151 
Mass.  302,  307,  308,  23  N.  E.  824. 

The  defendant  also  claims  a  set-oft"  by  virtue  of  his  covenant. 
We  assume  that  it  has  been  adjudicated  Ijetween  the  parties  in  the 
district  court  that  the  defendant  h.as  not  a  claim  which  he  could 
prove  in  his  own  name,  and  that  this  decision  carries  with  it  the 
corollary  that  he  could  not  prove  his  claim  on  the  covenant  against 
the  estate.  If,  therefore,  the  prohibition  of  a  set-off  of  a  claim 
"which  is  not  provable  against  the  estate"  is  to  be  taken  with  simple 
literalness  as  applying  to  any  claim  that  could  not  be  proved  in  the 
existing  bankruptcy  proceedings,  the  defendant's  set-off  cannot  be 
maintained.  I'.ut  we  are  of  opinion  that  the  seemingly  simple 
words  which  we  have  quoted  must  be  read  in  the  light  of  their 
history  and  in  connection  with  the  general  provision  at  the  begin- 
ning of  §  68  for  a  set-oft"  of  mutual  debts  "or  mutual  credits,"  and 
that  so  read  they  interpose  no  obstacle  to  the  defendant's  claim. 

riie  provision  for  the  set-oft'  of  mutual  credits  is  old.  Stat.  4 
Anne,  chap.  17.  §  1 1  ;  5  Geo.  II.,  chajx  30,  §  28;  46  Geo.  III.,  chap. 
135'  §v^  ;  Gibson  V.  Bell,  1  Bing.  X.  L".  743.  753 ;  Ex  Parte  Prcscott, 
I  xA-tk.  230.  It  was  adopted  in  the  United  States  (Acts  1800, 
chap.  19,  §  42,  Acts  1 84 1,  chap.  9,  §  5,  and  Acts  1867,  chap.  176, 
§  20).  I)Ut  while  the  provision  as  to  mutual  credits  was  thought 
to  be  more  extensive  than  that  as  to  nnitual  debts  {Atkinson  v. 
Elliott,  7  T.  R.  378,  380),  it  was  held  that  even  the  broader  phrase 
did  not  extend  to  claims  which,  when  the  moment  of  set-off  ar- 
rived, still  were  wholly  contingent  and  uncertain,  such,  for  in- 
stance, as  the  claim  upon  this  covenant  would  have  been  if  the 
defendant  had  not  yet  been  called  upon  to  pay  anything  upon  the 
original  partnershi])  debt.  Abbott  v.  Hicks,  5  Bing.  N.  C.  578; 
Robson,  Bankr.  7th  ed.  374.  But  the  moment  when  the  set-ofT 
was  claimed  was  the  material  moment.  The  defendant's  claim 
might  have  been   contingent  at  the  adjudication   of   bankruptcy. 


MORGAN   VS.    WORDlil.L. 


269 


and  so  not  provable  in  the  absence  of  special  provisions  snch  as 
are  to  be  found  in  the  later  bankrupt  acts  in  England  and  in  the 
United  States  act  of  1867,  although  not  in  the  present  law,  and  yet 
if  it  had  been  liquidated,  as  here  by  payment,  l^efore  the  defendant 
was  sued,  he  was  allowed  without  question  to  set  it  off.  Smith  v. 
Hodson,  4  T.  R.  21 1  Ex  parte  Boyle,  Re  Shepherd,  i  Cooke,  Bank- 
rupt Laws,  8th  ed.  561  ;  Ex  parte  Wagstaff,  13  Ves.  Jr.  65  ;  Marks 
V.  Barker,  i  Wash.  C.  C.  178.  i8i.  Fed.  Cas.  No.  9,096. 

The  limitations  worked  out  by  these  decisions  were  expressed 
in  the  section  of  the  act  of  1867  cited  above,  in  the  words  "but 
no  set-off  shall  be  allowed  of  a  claim  in  its  nature  not  provable 
against  the  estate."  These  words,  as  it  seems  to  us,  following  the 
cases,  refer  yet  to  the  nature  of  the  claim  at  the  moment  when  it 
was  sought  to  set  it  off,  not  to  its  nature  at  the  beginning  of  the 
pending  bankruptcy  proceedings,  and  did  not  prevent  a  set-off  of 
a  claim"  which  was  liquidated  at  the  later  moment  merely  because, 
when  the  bankruptcy  proceedings  began,  for  some  reason  it  did 
not  admit  of  proof.  The  present  statute  leaves  out  the  words  "in 
its  nature."  but  we  can  have  no  doubt  that  it  was  intended  to  con- 
vey the  same  idea  as  the  longer  phrase  in  the  last  preceding  act, 
from  which  in  all  probability  its  words  were  derived.  "Provable" 
means  provable  in  its  nature  at  the  time  when  the  set-off  is  claimed, 
not  provable  in  the  pending  bankruptcy  proceedings. 

The  right  to  set  off  the  claim  when  liquidated  after  the  begin- 
ning of  the  bankruptcy  proceedings  was  based  upon  its  being  a 
mutual  credit,  not  upon  the  claim  being  provable,  which  it  was  not 
until  the  later  l^ankruptcy  statutes.  Russell  v.  Bell,  8  Mees.  &  W. 
277,  281.  Converselv.  of  course  the  exclusion  of  a  set-off,  when 
the  claim  still  was  contingent  and  the  defendant  had  made  no  pay- 
ment, did  not  stand  on  the  ground  that  the  claim  was  not  provable 
in  the  existing  bankruptcy  proceedings,  but  on  the  ground  that  it 
was  not  provable  in  its  nature,  and  that  there  was  no  machinery 
available  to  liquidate  it.  If  we  are  right  in  supposing  that  the  act 
of  1867  meant  merely  to  codify  a  principle,  or  rather  a  limitation 
developed  by  the  courts,  and  that  the  words  of  the  present  act  mean 
no  more  than  those  of  the  act  of  1867,  it  follows  that,  although 
the  defendant's  claim  could  not  have  been  proved  against  the 
estate,  still  it  is  a  mutual  credit  and  may  be  set  oft'  when  he  is 
sued. 

Judgment  for  defendant. 


270  GUARANTY   AND   SURKTYSKIP. 

TlIAVKK    7X    DaXIIlLS     (  1872). 

HO  Mass.  345. 

Contract.  The  declaralion  allcLivd  that  the  defendant  as 
principal,  and  the  plain.tilT  as  surety,  signed  a  note  for  $500, 
dated  September  28,  1861,  and  payable  on  demand  to  Xathan 
George  or  order,  with  interest;  that  tlie  plaintiff  signed  as  surety 
without  consideration,  and  for  the  accommodation  of  the  defend- 
ant ;  that  the  defendant  failed  to  pay  the  note ;  and  that  the 
plaintiff  had  to  pay  to  Cieorge  the  principal  of  the  note  to  take  it 
up.  The  answer  denied  the  allegations  of  the  declaration,  and 
also  set  up  the  statute  of  limitations,  and  a  discharge  of  the  de- 
fendant in  insolvency. 

At  the  trial  in  the  superior  court,  before  Bacon,  J.,  it  appeared 
that  the  plaintiff"  executed  the  note  without  any  consideration, 
and  for  the  accommodation  of  the  defendant ;  that  the  defendant 
on  February  1  1,  1862,  filed  his  petition  for  the  benefit  of  the  in- 
solvent law  ;  that  a  warrant  was  duly  issued ;  that  at  the  third 
meeting  of  the  creditors  George  proved  the  note  against  the  de- 
fendant's estate ;  that  a  small  dividend  was  then  declared ;  that 
afterwards,  in  August,  1862,  the  defendant  was  duly  discharged 
from  his  debts;  and  that  on  May  i,  1865,  the  plaintiff"  paid  to 
George  on  the  note  $500,  which  was  less  than  the  amount  then 
due  upon  it,  and  took  it  up.  The  defendant  asked  the  judge  to 
rule  that  the  statute  of  limitations  began  to  run  against  the 
plaintiff"'s  cause  of  action  from  the  time  the  note  fell  due;  and 
that  the  discharge  in  bankruptcy  was  a  bar  to  the  action ;  but 
the  judge  refused  so  to  rule,  and  ruled  that  on  the  foregoing  facts 
the  plaintiff  was  entitled  to  recover.  The  jury  returned  a  verdict 
for  the  plaintiff,  and  the  defendant  alleged  exceptions. 

P.  E.  Aldrich,  (S.  A.  Burgess  with  him,)  for  the  defendant. 
T.  G.  Kent,  for  the  plaintiff". 

Ames,  J.  There  was  an  implied  promise,  on  the  part  of  the 
defendant,  as  principal,  to  indemnify  the  surety,  and  to  repay  to 
him  all  the  money  that  he  might  be  compelled,  in  consequence  of 
his  liability  as  surety,  to  i)ay  to  the  creditor.  Until  the  surety 
has  been  compelled  to  make  such  payment,  there  is  no  breach  of 
this  implied  promise.     The  cause  of  action  accrues  then   for  the 


THAYER   VS.    DANIELS.  271 

first  time,  and  the  statute  of  limitations  then  begins  to  run.  Of 
course  the  exception  that  the  claim  of  the  plaintiff  is  l)arred  by 
that  statute  cannot  be  maintained  ^-Ipl^lcfon  v.  Bascoin,  3  Met. 
169;  Hall  V.  Thayer,  12  Met.  130. 

At  the  time  when  the  defendant  i)etilioned  for  the  l)eneiit  of 
the  insolvent  law,  the  plaintiff's  cause  of  action  against  him  had  not 
accrued.  Xothino-  was  due  at  that  time  from  the  insolvent  to  the 
plaintiff,  and  whether  anything  would  become  due  depended  upon 
the  contingency  of  his  being  compelled  to  pay,  and  actually  pay- 
ing, the  note,  in  whole  or  in  part.  If  the  plaintiff  had  taken  up 
the  note,  or  made  a  payment  upon  it,  at  any  time  before  the 
making  of  the  first  dividend,  his  claim  for  the  money  so  paid 
would  have  been  provable  against  the  estate  of  the  insolvent, 
under  the  Gen.  Sts.  c.  118,  §  25,  and  would  therefore  have  been 
barred  by  the  discharge.  But  it  appears  from  the  report  that  no 
money  was  paid  by  the  plaintiff  as  surety,  and  no  cause  of  action 
accrued  to  him  against  the  insolvent,  until  long  after  the  first  and 
only  dividend  was  paid  from  his  estate. 

The  case  of  Mace  v.  Wells,  7  How.  2y2,  which  is  relied  upon 
by  the  defendant,  arose  under  the  bankrupt  act  of  1841,  a  stat- 
ute which  differed  from  our  insolvent  law,  in  allowing  sureties 
and  other  parties  under  a  contingent  liability  to  prove  such  con- 
tingent liabilities  as  claims  upon  the  estate,  and  "when  their  debts 
and  claims  become  absolute,"  to  have  them  allowed. 

The  defendants  also  insist  that  the  debt  itself  was  provable 
and  was  therefore  discharged ;  but  this  is  not  true  as  to  the  con- 
tingent claim  of  the  surety.  He  had  no  claim  that  was  provable 
under  the  statute,  at  the  date  of  the  discharge. 

Two  other  cases  relied  upon  by  the  defendant.  Wood  v.  Dodg- 
son,  2  M.  &  S.  195,  and  Vaiisandaii  v.  Corsbie,  8  Taunt.  550,) 
were  decided  under  English  statutes  which  in  express  terms  make 
the  contingent  liability  of  a  surety  a  provable  claim  against  the 
bankrupt's  estate.  In  the  first  of  these  cases  the  court  say  that 
the  statute  was  intended  to  benefit  the  sureties,  by  allowing  them 
to  share  in  the  dividend  before  the  estate  is  all  gone,  and  before 
the  actual  payment  of  their  liabilities.  Neither  of  these  deci- 
sions is  applicable  to  a  case  under  our  insolvent  laws. 

Exceptions  overruled. 


272  GUARANTY  AND  SURETYSHIP. 

Lansdalk  1's.  Cox   (1828J. 
7  B.  Mon.  (Ky.)  401. 

i]Jaycs  &  Chapcac,  for  plaintiffs. 
tlanl'.n  &  Darby,  for  defendants. 

Opinion  of  the  court  by  Chief  Justice  Bii'.u. 

Ivicliard  l.ansdale  and  James  Cox  were  the  sureties  of  Shanks, 
in  an  injunction  bond  to  Summers,  who  sued  Cox,  the  surviving 
obhgor,  and  had  judgment  for  $730.24,  beside  costs,  which  was 
paid  by  Cox's  surety  in  a  replevin  bond,  and  afterward  paid  by 
Cox  to  his  surety.  These  ])roceedings  were  in  the  Nelson  circuit 
court. 

Cox  thereafter,  upon  motion  against  the  heirs  of  Shanks 
[402]  the  principal,  (stating  that  there  was  no  executor  or  ad- 
ministrator of  Shanks,)  had  judgment,  and  execution,  upon  which 
the  sheriff'  made  a  small  ])art  of  the  judgment,  (about  $35.19,) 
and  returned  that  he  could  find  no  estate  whereof  to  satisfy  the 
residue. 

Cox  then  sued  his  motion  against  the  heirs  and  administrators, 
jointlv,  of  his  co-security,  Lansdale,  for  contribution,  and  recov- 
ered judgment;  to  which  the  defendants  prosecute  this  writ  of 
error. 

The  whole  doctrine  of  contribution  Ijetwcen  sectu-ities  origi- 
nated with  courts  of  equity.  There  is  no  express  contract  for 
contribution  ;  the  bonds,  obligations,  bills,  or  notes,  created  liabili- 
ties from  the  obligors  to  the  obligees.  The  contribution  between 
co-sureties  results  from  .the  maxim,  that  equality  is  equity.  Pro- 
ceeding on  this,  a  surety  is  entitled  to  every  remedy  which  the 
creditor  has  against  the  principal  debtor ;  to  stand  in  the  place  of 
the  creditor ;  to  enforce  every  security,  and  all  means  of  payment ; 
to  have  those  securities  transferred  to  him,  though  there  was  no 
stipulation  for  that.  This  right  of  a  surety  stands  upon  a  prin- 
ciple of  natural  justice.  Hie  creditor  may  resort  to  principal,  to 
either  oi  the  securities,  for  the  wliolc,  or  to  each  for  his  proportion, 
and  as  he  has  that  right,  if  he,  from  partiality  to  one  surety,  or 
for  other  cause,  will  not  enforce  it,  the  court  of  equity  gives  the 
same  right  to  the  other  surety,  and  enables  him  to  enforce  it.  Nat- 
ural  justice   says  that  one   surety  having  become   so   with  other 


LANSDALE    NS.     COX.  278 

sureties,  shall  not  have  the  whole  debt  thrown  upon  him  by  the 
choice  of  the  creditor,  in  not  resorting  to  remedies  in  his  power, 
without  having-  contribution  from  those  who  entered  into  the 
obligation  equally  with  him.  The  obligation  of  co-sureties, 
to  contribute  to  each  other,  is  not  founded  in  contract  between 
them,  but  stood  upon  a  principle  of  equity,  until  that  principle  of 
equity  had  been  so  universally  acknowledged,  that  courts  of  law, 
in  modern  times,  have  assumed  jurisdiction.  This  jurisdiction  of 
the  courts  of  common  law  is  based  upon  the  idea,  that  the  equitable 
principle  had  been  so  long  and  so  generally  acknowledged,  and 
enforced,  that  persons,  in  placing  themselves  under  circumstances 
to  which  it  applies,  may  be  supposed  to  act  under  the  dominion 
of  contract,  implied  from  the  universality  of  that  principle.  For 
a  great  length  of  time,  equity  exercised  its  jurisdiction  exclusively 
and  undividedly ;  the  jurisdiction  assumed  by  the  courts  of  law  is, 
comparatively  of  very  modern  date;  and  is  attended  with  great 
difficulty  where  there  are  many  sureties ;  though  simple  and  easy 
enough  where  there  are  but  two  sureties,  one  of  whom  brings  his 
action  against  the  other  upon  the  implied  assumpsit  for  a  moiety. 

The  action  at  law,  then,  by  one  surety  against  his  co-security, 
arises  out  of  an  implied  undertaking,  not  by  force  of  express  con- 
tract, and  consequently  the  heirs  can  not  have  been  expressly  bovmd 
by  the  ancestor.  So  that  the  action  at  law,  by  one  surety  against 
the  representatives  of  a  deceased  co-surety,  must,  by  the  principles 
of  the  common  law,  be  against  the  executor  or  administrator.  To 
reach  the  heirs  in  a  suit  at  law,  the  remedy  given  by  our  statute 
in  such  cases,  must  be  jointly  against  the  executors  or  adminis- 
trators and  heirs,  not  against  the  heirs  alone.  The  remedy  in 
equity  by  substitution  of  the  co-security  in  place  of  the  creditor, 
and  so  allowing  the  one  surety  his  redress  against  his  co-surety 
or  co-sureties  for  contribution,  still  remains ;  the  remedy  at  law, 
by  a  regular  action  jointly  against  the  heirs  and  executors  or  ad- 
ministrators, by  force  and  operation  of  the  statute  of  1792,  may 
be  pursued. 

Reversed,  with  directions  to  lower  court  to  dismiss  motion.^ 


^That    part    of    the    opinion    dealing    with    the    statute    and    practice    thereunder    is 
omitted.  ' 


274  GUARANTY  AND   SURETYSillP. 

Easterly  z's.  Baki!kr  (1876). 
66  N.  Y.  433- 

There  were  two  appeals  in  this  case,  the  one  by  plaintiff 
from  an  order  of  the  general  term  of  the  supreme  court  in  the 
fourth  judicial  department  denying  motion  for  a  new  trial  and 
directing  judgment  on  a  verdict,  the  other  by  defendant  from 
the  judgment  entered  upon  such  order. 

The  action  was  brought  l)y  plaintiff  as  third  indorser  of  a 
promissory  note  to  recover  the  amount  thereof  of  the  second 
indorser. 

The  note  in  question  was  made  by  the  Stevenson  Manufac- 
turing Company,  payable  to  the  order  of  one  Knight,  who  in- 
dorsed it.  Defendant  was  second  indorser,  plaintiff'  third,  and 
one  MacDougall  the  fourth.  Defendant  alleged  in  his  answer 
that  the  note  was  given  and  discounted  for  the  benefit  of  the 
maker,  in  which  company  ail  the  four  indorsers  were  stockholders ; 
that  they  indorsed  for  the  acccjmmodation  of  the  company  under 
an  agreement  that  as  between  themselves  they  should  be  co-sure- 
ties, and  share  and  contribute  e(|ually  to  the  amount  all  or  either 
should  be  obliged  to  pay  thereon. 

Upon  a  former  trial  plaintiff  recovered  a  judgment  for  one- 
fourth  the  amount  of  the  note.  It  appeared  on  such  trial  that  the 
two  other  indorsers  were  insolvent.  The  general  term  reversed 
the  judgment  and  ordered  a  new  trial  on  the  ground  that  plaintiff 
was  entitled  to  judgment  for  one-half  the  amount.  3  N.  Y.  S.  C. 
(T.  &  C.)  421." 

Upon  the  second,  ])ar(jl  evidence  was  received  to  prove  the 
allegations  of  the  answer,  which  was  received  under  objection 
and  exception.  The  evidence  tended  to  show  that  the  note  in  suit 
was  a  renewal  of  a  former  note ;  that  the  agreement  was  made  in 
reference  to  the  original  note,  which  was  renewed  froiu  time  to 
time.  The  testimony  was  conflicting  as  to  whether  anv  thing 
was  said  in  reference  to  the  liability  as  co-sureties  at  the  time  of 
the  indorsements  of  the  note  in  suit. 

Plaintiff  was  allowed  to  prove,  under  objection  and  excep- 
tion, the  insolvency  of  the  other  two  indorsers.  Knight  and  Mac- 
Dougall. Evidence  was  given  on  the  part  of  defendant  tending 
to   show  that   the   bank    which   discounted   the  note   brought   suit 


EASTERLY  VS.   BARBER.  275 

thereon  against  plaintiff  alone  at  defendant's  request  upon  his 
giving  security  to  indemnify  the  bank. 

As  to  the  agreement,  the  court  charged,  in  substance,  that 
if  the  jury  found  that  the  agreement  was  made  as  claimed  by 
defendant,  plaintiff  was  entitled  to  judgment  for  one-half  the 
amount  of  the  note,  to  which  defendant's  counsel  duly  excepted. 

The  court  also  charged  as  follows:  "If  former  notes  have 
been  given  under  this  agreement,  with  the  understanding  that  they 
were  to  stand  with  a  joint,  instead  of  a  separate  liability,  and  that 
note  was  carried  along  until  it  came  to  this  one,  and  they  signed 
this  note  with  the  arrangement  and  understanding  resting  upon 
their  minds,  you  will  have  no  doul)t  in  coming  to  the  coniclusion 
that  this  agreement  attaches  to  this  last  note;"  to  which  plaintiff's 
counsel  duly  excepted.  Exceptions  were  ordered  to  be  heard  at 
first  instance  at  general  term. 

E.  H.  Avery,  for  the  plaintiff. 
Francis  Kernan,-iov  the  defendant. 

Miller,  J.  The  fir.st  question  presented  upon  these  appeals 
is,  whether  it  is  competent  in  an  actioii  by  one  indorser  against 
a  prior  indorser  for  the  defendant  to  prove  by  parol  an  agreement 
between  all  the  indorsers  that  they  were,  as  between  themselves, 
co-sureties  where  they  are  accommodation  indorsers.  In  Barry  v. 
Ransom  (12  N.  Y.  462)  it  was  held  that  an  agreement  made  be- 
tween parties  prior  to  or  contemporaneously  with  their  executing  a 
written  obligation  as  sureties,  by  which  one  promises  to  indemnify 
the  other  from  loss,  does  not  contradict  or  vary  the  terms  or  legal 
effect  of  the  written  obligation,  and  it  may  be  proved  by  parol 
evidence.  It  was  said  by  Denio,  J.,  in  the  opinion,  that  an  agree- 
ment among  the  sureties,  arranging  their  eventual  liabilities  among 
themselves  in  a  manner  different  from  what  the  law  would  pre- 
scribe, in  the  absence  of  an  express  agreement,  would  not  contra- 
dict any  of  the  terms  of  the  bond.  It  was  also  held,  that  the  en- 
gagement among  themselves  had  no  necessary  place  in,  the  instru- 
ment between  them  and  the  other  contracting  parties.  The  case 
cited  referred  to  a  joint  and  several  bond,  where  the  obligors  were 
equally  liable  upon  its  face.  No  reason  exists,  however,  why  the 
same  principle  is  not  applicable  to  notes  and  bills  of  exchange. 
1  he-  terms  of  the  contract  contained  in  instruments  of  this  charac- 
ter, which  are  within  its  scope  to  define  and  regulate,  cannot  be 


"276  GUARANTY   AXD  SURF-nVSHn'. 

changed  by  parol ;  but  the  understanding  between  the  indorsers 
i^  a  distinct  and  separate  subject,  an  outside  matter,  which  may 
be  properly  proved  independent  of  and  without  any  regard  to  the 
instrument  itself.  This  rule  is  distinctly  established  in  reference 
to  joint  makers  of  promissory  notes ;  and  although  the  previous 
decisions  had  been  somewhat  uncertain  it  has  been  recently  deter- 
mined by  the  decision  of  this  court  that  where  a  person  signed, 
as  surety,  a  joint  and  several  promissory  note,  and  it  did  not  appear 
by  the  instrument  itself  that  such  relation  existed,  he  might  prove 
such  fact  by  parol,  and  that  such  proof  did  not  tend  to  alter  the 
terms  of  the  contract.  Hubbard  v.  Giiniey,  64  N.  Y.  457.  It  is 
not  apparent  that  any  such  difference  exists  between  the  two  classes 
of  cases  which  prevents  the  application  of  the  same  j^rinciple  to 
both  of  them. 

An  attempted  distinction  is  sought  to  be  maintained  because 
the  relation  of  indorsers  to  each  other  are  fixed  by  law ;  while 
the  relations  and  obligations  of  sureties  and  obligors  are  not  fixed. 
As  between  the  princii)al  and  the  sureties  they  are  fixed  quite  as 
much  as  bet\veen  indorsers,  and  can  only  be  settled  as  between 
sureties  where  the  contract  does  not  show  the  fact  by  parol  proof 
of  the  same.  In  support  of  the  same  views  is  the  case  of  Philips 
v.  Preston  {5  How.  [U.  S.j  278,  292),  where  the  doctrine  is  laid 
down  that  proof  of  a  collateral  contract,  by  parol,  may  be  given 
to  show  the  liability  of  indorsers  as  between  themselves.  See,  also, 
McDonald  v.  Magruder,  3  Peters,  470;  Aiken  v.  Barkly.  2  Speers, 
747;  Edclcn  V.  White,  6  Bush.  (Ky.),  408;  Davis  v.  Morgan,  64 
N.  C.  570.  The  indorsements  upon  bills  of  exchange  or  promis- 
sory notes  rest  upon  the  theory  that  the  liability  of  indorsers  to 
each  other  is  regulated  by  the  position  of  their  names,  and  that 
the  paper  is  transferred  from  the  one  to  the  others  by  indorse- 
ment. But  this  rule  has  no  practical  application  to  accommodation 
indorsers,  where  neither  of  them  has  owned  the  paper  and  no  such 
transfer  has  been  made.  It  is  easy  to  see  that  the  application  of 
the  rule  contended  for,  in  many  cases,  w'ould  work  the  most  serious 
injustice.  Suppose  a  person  sign  as  accommodation  maker  of  a 
promissory  note,  and  the  payee  for  whose  benefit  it  is  made  in- 
dorses it  and  pays  the  note,  and  afterwards  sues  the  maker  to 
recover  back  the  money,  would  it  be  seriously  contended  that 
proof  could  not  be  given  to  show  that  he  was  merely  an  accom- 
modation maker?  Clearly  not;  and  yet  such  evidence  would 
contradict  the  written  instrument   (luite  as  nmch  as  it  would  to 


i:AS-n:i<i.v  \'s.  r.ARpi-:R. 


277 


prove  an  agreement  between  indorsers  in  regard  to  their  lial)ility 
as  between  each  other.  Cases  frequently  arise  wliere  it  is  com- 
petent to  prove  that  the  indorsement  is  made  for  the  accommoda- 
tion of  the  maker ;  and  a  drawee  may  show,  after  acceptance,  that 
he  has  no  funds  (3  N.  Y.  423)  in  his  hands,  and  that  he  was 
merely  an  accommodation  acceptor.  Griffith  v.  Reed,  21  Wend. 
502.  The  cases  to  which  we  have  been  referred  by  the  plaintiff's 
counsel  do  not,  we  think,  sustain  the  position  contended  for ;  that 
parol  proof  cannot  be  given  to  show  an  arrangement  between 
accommodation  indorsers  different  from  that  which  appears  by 
the  legal  effect  of  the  instrument,  and  a  particular  examination 
of  them  is  not  required.  The  uniform  practice  in  this  State  has 
been  in  conformity  to  the  views  expressed  in  reference  to  proof 
of  this  character,  and  it  would  be  establishing  a  new  rule  at  this 
time  to  hold  that  such  testimony  was  incompetent.  There  was, 
therefore,  no  error  committed  by  the  judge  in  the  admission  of  the 
evidence  to  which  objection  was  taken. 

There  is  no  force  in  the  objection  made  by  the  plaiotift"'s 
counsel  tliat  the  evidence  failed  to  establish  the  agreement  alleged 
in  the  answer  to  have  been  made  in  reference  to  the  note  in  suit. 
It  was  purely  a  question  of  fact  what  the  agreement  actually 
made  was.  No  request  was  made  to  take  the  case  from  the  jury, 
and  sufficient  was  shown  to  submit  the  question  raised  to  their 
consideration.  There  is  no  ground  for  claiming  that  the  defend- 
ant was  estopped  from  setting  up  the  verbal  agreement  alleged 
to  have  been  made  as  a  defense.  The  arrangement  of  the  defend- 
ant with  the  bank  for  the  prosecution  of  the  note  and  the  collection 
of  the  same  of  the  plaintiff,  and  the  security  given  thereupon  do 
not  contain  the  elements  of  an  estoppel.  The  defendant  was  not 
the  actual  party  in  the  suit,  and  the  most  which  can  be  said  in 
regard  to  it  is,  that  the  defendant  preferred  to  have  it  collected 
of  Easterly  instead  of  himself,  and  to  compel  Easterly  to  sue  him 
for  the  proportion  which  he  was  lawfully  liable  to  pay.  There 
was  no  assumption  in  this,  we  think,  that  estops  the  defendant. 

We  are  also  of  the  opinion  that  there  was  no  error  in  that 
portion  of  the  charge  wlierein  the  court  instructed  the  jury  that 
if  former  notes  had  been  given  under  the  agreement  with  the 
understanding  that  they  were  to  stand  with  a  joint  instead  of  a 
separate  liability,  and  they  were  carried  along  until  they  came  to 
this  one,  which,  if  it  was  signed  with  the  arrangement  and  under- 
standing  resting  upon  their   minds,   they   would   have   no   doubt 


278  GUARANTY  AND   SURETVSHIP. 

in  coming:  to  the  conclusion  tliat  this  agreement  attaches  to  the 
last  note.  This  was  a  necessary  result  of  the  facts  proved  and 
clearly  right.  The  requests  to  charge  upon  this  branch  of  the 
case  in'  this  connection  were  ])roperly  refused,  as  the  propositions 
presented  were  sufficiently  covered  in  the  charge  which  had  al- 
ready been  made.  The  discussion  had,  leads  lo  the  conclusion  that 
sufficient  grounds  are  presented  on  the  plaintitt's  appeal  for  a 
reversal  or  modification  of  the  judgment. 

Other  questions  arise  upon  the  defendant's  appeal,  which 
should  be  considered.  It  is  claimed  that  an  action  at  law  by  a 
surety  for  contribution  must  be  against  each  of  die  sureties  sepa- 
rately for  his  proportion,  and  that  no  more  can  be  recovered,  even 
where  one  or  more  are  insolvent.  In  the  latter  case,  the  action 
must  be  in  equity  against  all  the  co-sureties  for  contributions, 
and.  upon  proof  of  the  insolvency  of  one  or  more  of  the  sureties, 
the  payment  of  the  amount  will  be  adjudged  among  the  solvent 
parties  in  due  proportion.  The  principle  stated  is  fully  sustained 
by  the  authorities.  It  is  thus  stated,  in  Parsons  on  Contracts 
(vol.  I,  page  34)  :  "At  law,  a  surety  can  recover  from  his  co- 
surety an  aliquot  part,  calculated  upon  the  whole  number,  without 
reference  to  the  insolvency  of  others  of  the  co-sureties ;  but  in 
equity  it  is  otherwise."  See,  also,  Browne  v.  Lee,  6  Barn.  &  Cress. 
689,  13  Eng.  C.  L.  394;  Coti'ell  v.  Edwards,  2  B.  &  Pull.  268; 
Beanian  v.  Blaiicliard,  4  Wend.  432,  435  ;  Story's  Eq.  Juris.,  §  496; 
I  Chitty  on  Con.  f5th  Am.  ed.),  597,  598;  Willard's  Eq.  Juris., 
108.  There  seems  to  be  a  propriety  in  the  rule  that  where  sure- 
ties are  called  upon  to  contribute,  and  some  of  them  are  insolvent, 
that  all  the  parties  should  be  brought  into  court  and  a  decree  made 
upon  equitable  principles  in  reference  to  the  alleged  insolvency. 
There  should  be  a  remedy  decreed  against  the  insolvent  parties, 
which  may  be  enforced  if  they  become  afterwards  able  to  pa}%'' 
and  this  can  only  be  done  in  a  court  of  equity  and  when  they  are 
parties  to  the  action.  The  action  here  was  not  of  this  character; 
nor  were  all  the  proper  parties  before  the  court.  It  was  clearly 
an  action  at  law,  and  in  that  point  of  view,  as  we  have  seen,  the 
plaintiff  could  only  recover  for  one-fourth  of  the  debt  for  which 
all  the  sureties  were  liable.  The  distinction  l)etween  the  two 
classes  of  actions  is  recognized  by  the  decisions. 

The  remedies,  the  parties  and  course  of  procedure  are  each 
different.  In  the  one,  a  jury  trial  is  a  matter  of  right ;  while  in 
the  other  the  trial  is  ])v  the  court.     The  costs  are  also  in  the  dis- 


MOORE  VS.   BRUNER.  279 

cretion  of  the  court.  (Code,  §§  253,  306;  13  N.  Y.  [supra], 
498.)  As  the  judgment  could  not  require  each  of  the  parties 
to  pay  his  aHquot  share  and  furnish  a  remedy  over  against  those 
who  were  insolvent  and  the  rights  of  the  parties  be  finally  deter- 
mined and  fixed,  it  was  under  the  facts  proven  clearly  erroneous. 
Although  in  many  cases  under  the  Code  the  pleadings,  if  neces- 
sary, may  be  made  to  conform  to  the  facts,  and  the  case  disposed 
of  upon  the  merits,  the  defects  here  are  so  radical  as  to  strike 
at  the  very  foundation  of  the  action,  and  cannot  thus  be  remedied. 
Besides,  the  proper  parties  are  not  before  us,  and  cannot  be 
brought  in,  except  on  motion  in  the  court  below.  As  the  claim 
was  alleged  in  the  complaint,  there  was  no  such  defect  of  parties 
apparent  as  required  the  defendant  to  take  the  objection  by  de- 
murrer or  answer. 

It  follows  that  the  judgment  must  be  affirmed  upon  the  plaint- 
iff's appeal,  with  costs  of  appeal  to  be  paid  by  the  plaintiff  upon 
the  tinal  termination  of  the  action,  if  the  defendant  succeeds;  and 
if  the  plaintiff  succeeds,  to  be  set  off  against  the  plaintift"s  costs. 
And  the  judgment  must  be  reversed  upon  the  defendant's  appeal, 
with  costs  of  the  appeal  in  this  court,  and  costs  in  the  supreme 
court  to  abide  the  event. 

All  concur,  except  Church,  Ch.  J.,  dissenting. 

Ordered  accordingly. 


Moore  7 '.y.  Bruner   (1889). 
31  111.  App.  400. 

Mr.  C.  L.  V.  Mnlkcy,  for  plaintiff  in  error. 
Messrs.  Courtney  &  Helm,  for  defendant  in  error. 

Green,  P.  J.  It  is  averred  in  the  declaration  in  this  case 
that  plaintiff,  Bruner,  and  Moore,  the  defendant,  together  with 
McCammon  and  Gray,  became  sureties  on  the  bond  of  the  guard- 
ian of  Barnes;  that  the  guardian  died  owing  his  ward,  and  after- 
ward judgment  was  rendered  in  Massac  probate  court  against 
the  estate  of  the  guardian  in  favor  of  the  ward  for  $500,  but  the 
estate  being  insolvent  no  part  of  this  judgment  was  paid;  that 
afterward  suit  was  brought  in  the  Alassac  circuit  court  upon  the 


280  GUARANTY  AND  .SURETYSHIP. 

lx)nd  against  Bruner  and  McCammon,  and  judgment  was  there 
recovered  against  them  for  $500  and  costs;  that  AlcCammon  is 
insolvent  and  Gray  (hcd  insolvent;  that  plaintiff  Bruner  dis- 
charged said  judgment  in  full,  wherefore  defendant  became  liable 
to  pa}-  him  $269.45  Ijy  way  of  contribution.  .V  count  for  money 
paid  out  by  plaintiff  for  defendant  is  added.  The  cause  was  tried 
by  the  court.  Judgment  was  rendered  in  favor  of  the  plaintiff 
for  $260  and  costs,  to  reverse  which  defendant  sued  out  tliis  writ 
of  error. 

The  cause  of  action  set  out  in  diis  declaration,  is  the  payment 
made  by  Bruner  in  satisfaction  of  the  judgment  recovered  against 
himself  and  AlcCammon  as  sureties  upon  said  guardian's  bond, 
one-half  of  which  amount  so  paid,  instead  of  one-fourth,  Bruner 
insists  is  the  proix)rtion  plaintiff'  in  error  as  a  co-surety  is  legally 
liable  to  contribute,  because  of  the  insolvency  of  the  two  other 
co-sureties,  McCammon  and  Gray.  This  was  the  view  of  the 
trial  court  and  in  accordance  therewith  the  judgm'ent  against 
plaintiff'  in  error  was  rendered.  The  court  erred  in  so  holding. 
At  law  the  amount  of  damages  which  plaintiff"  was  entitled  to 
recover  from  defendant  as  a  co-surety  was  one-f(jurth  of  the  wdiole 
debt  paid,  with  interest  from  tl;e  time  of  payment.  There  were 
four  sureties,  each  of  whom,  as  between  themselves,  became  liable 
at  law  to  contribute  an  aliquot  portion  of  the  sum  paid  by  Bruner, 
and  this  aliquot  portion  is  to  be  ascertained  upon  the  basis  of  the 
number  of  sureties,  without  regard  to  their  solvency.  Such  we 
understand  to  be  the  law  in  this  state. 

It  is  said  in  the  opinion  in  Sloo  v.  Pool,  15  111.  48,  "Sureties 
are  individually  liable  to  the  creditor,  but  one  is  as  much  bound 
to  discharge  the  debt  as  another.  If  the  creditor  endeavors  to- 
enforce  payment  from  them,  it  is,  as  between  themselves,  the 
duty  of  each  to  pay  an  aliquot  portion  of  the  debt.  If  that  is  not 
done,  and  one  is  conqjelled  to  pay  the  whole,  he  is  entitled  to 
contribution  from  the  others  in  the  same  proportion.  The  law 
implies  an  agreement  between  them  when  they  become  responsible 
to  the  creditor,  that  if  one  shall  be  compelled  to  pay  the  debt 
the  others  will  contribute  so  as  to  make  the  burden  equal.  If 
one  pays  the  whole  debt  he  has  a  cause  of  action  against  the  others 
to  recover  their  just  proportion,  as  so  much  money  paid  to  their 
use.  His  right  to  contribution  is  complete  as  soon  as  he  pays  the 
debt,  and  he  may  at  once  call  on  his  co-sureties  to  bear  the  common 
burden  with   him.      At  law  he  can  not  sue  two  or  more  jointly, 


Rl£  WALKER,   KTC,  VS.  CLAYTON.  281 

but  he  must  sue  each  separately,  and  he  can  only  recover  from 
one  an  aliquot  portion  of  the  debt,  to  be  ascertained  by  the  num- 
ber of  sureties,  without  regard  to  their  solvency.  In  equity,  if 
one  is  insolvent  the  loss  is  apportioned  among  the  others."  In 
I  Parsons  on  Cont.,  35,  the  rule  is  stated  thus:  "At  law  a  surety 
can  recover  from  his  co-surety  only  that  co-surety's  aliquot  part, cal- 
culated upon  the  whole  number,  without  reference  to  the  insolvency 
of  either  of  the  co-sureties,  but  in  eqviity  it  is  otherwise."  We  have 
examined  the  case  of  Golden  \.  Brand,  75  111.  148,  cited  on  behalf 
of  appellee,  and  do  not  understand  the  court  either  did,  or  intended 
to,  abrogate  or  modify  the  rule  announced  in  Sloo  v.  Pool,  siipni. 

For  the  errors  indicated  the  judgment  is  reversed  and  the 
cause  remanded. 

Reversed  and  remanded. 


Re  Walker;  Sheffield  I-.anking  Company  vs.  Clayton 

(1892.) 

66L.  T.  R.315. 

The  following  are  the  only  facts  material  to  the  present  re- 
port:— 

The  testator  in  the  year  1886  gave  to  the  London  and  York- 
shire Banlv  two  guarantees  for  the  sum  of  1000/.  each  to  secure 
tlie  overdraft  of  Arthur  Spencer  and  Reuben  Spencer  trading  as 
Spencer  Brothers. 

At  the  same  time  x\gnes  Spencer,  the  wife  of  Arthur  Speucer, 
gave  to  the  testator  as  security  for  anything. he  might  be  called 
upon  to  pay  under  the  guarantees,  two  equitable  mortgages  created 
by  memoranda  of  deposit  of  title  deeds.  The  memoranda  were 
dated  respectively  the  5th  July  and  the  i8th  Aug.,  1886. 

Subsequentlv  to  these  .transactions  Spencer  Brothers  trans- 
ferred their  account  from  the  London  and  Yorkshire  Bank  to  the 
Sheffield  Banking  Company. 

On  the  9th  Sept.,  1887,  the.  testator  gave  to  the  Sheffield  Bank- 
ing Company  a  guarantee  to  secure  the  repayment  of  all  moneys 
then  owing,  or  which  might  become  owing  to  them  by  Spencer 
Brothers  either  on  their  current  account  or  on  any  other  account 
to  the  extent  of  2000/. 


282  GUARANTY  AND  SURETYSHIP. 

In  the  month  of  May,  1880.  Spencer  Brothers  went  into  h(|ui(l- 
ation. 

'I'he  testator  died  on  the  4th  Nov.,  1888,  leavini^'  a  will  hy 
which  he  appointed  the  defendants  his  executors.  The  will  was 
proved  hy  the  defendants  on  the  24th  Jan.,  1889. 

The  plaintifif  company  then  commenced  a  creditor's  action  for 
the  administration  of  the  te.'^tator's  estate.  An  administration  judg- 
ment was  given  in  that  action  on  the  25th  April,  1890. 

The  testator's  estate  was  insufficient  for  pavment  of  debts, 
including  the  liability  of  the  testator  under  the  guarantee  given 
to  the  plaintiff  company. 

The  plaintiff  compan.y  now  claimed  to  be  entitled  to  the  ben- 
efit of  the  equitable  mortgage?  given  to  the  testator  by  Agnes 
Spencer. 

The  defendants,  on  the  other  hand,  contended  that  the  plain- 
tiffs were  not  so  entitled,  but  could  only  rank  as  creditors  pari 
passu  with  the  other  cred.itors  of  the  estate. 

Graham  Hastings,  Q.  C,  and  Curtis  Price  for  the  plaintiffs. 
Buckley,  O.  C,  and  Iiiglc  Joyce  for  the  defendants. 

Stirling,  J.,  stated  the  facts  and  continued: — The  plaintiffs' 
contention  was  founded  upon  two  cases.  The  first  is  an  old  case 
of  Maure  v.  Harrison  {uhi  sup.y  It  is  reported  ver\'  shortly  as 
follows :  "A  bond  creditor  shall  in  the  (Jottrt  of  Chancery  have  the 
benefit  of  all  counter-bonds  or  collateral  security  given  by  the  prin- 
cipal to  the  surety;  as  if  A.  owes  B.  money,  and  he  and  C.  are 
Ixnmd  for  it,  and  A.  gives  C.  a  mortgage  or  bond  to  indemnify  him, 
B.  shall  have  the  benefit  of  it  to  recover  his  debt."  That  case  was 
decided  in  Michaelmas,  1692.  The  plaintiff  also  relied  upon  a 
dictum  of  .Sir  William  Grant  in  Wright  v.  Morley  (ubi  sup.)^- 
which  nms  thus :  "I  conceive  that,  as  the  creditor  is  en'titled  to  the 
benefit  of  all  the  securities  the  principal  debtor  has  given  to  the 
surety,  the  surety  has  fully  as  good  an  equity  to  the  benefit  rtf  all 
the  securities  the  principal  gives  to  the  creditor."  As  to  the  latter 
}x:)rtion  of  the  sentence,  there  is  no  ((ucstion  at  all.  It  is  well  estab- 
lished at  this  date  that  the  surety,  on  paying  the  debt,  is  entitled 
to  stand  in  the  place  of  the  princi])al  creditor,  and  to  have  the  ben- 
efit of  all  the  securities  which  the  principal  creditor  had.  Now 
these  two  cases  were  very  much  discussed  in  the  well-known  case 

1.  I  Eq.  Cas.  Abr.  93;  20  Vin.  Abr.  p.  102. 

2.  n  Ves.  22. 


RE  WALKER,   FTC,  VS.   CLAYTON. 


283 


of  Ex  parte  fJ'ariiig  [ubi  SHp.)'-\  before  Lord  Eldon.  That  case 
is  most  fully  reported  perliaps  in  (ihn  fk  Jameson's  Reports.  Jt 
appears  from  that  report  that,  in  the  course  of  the  argument,  Lorfd 
Eldon  spoke  somewhat  disparagingly  of  the  case  of  Maure  v.  Har- 
rison. He  said  this :  "I  have  never  heard  this  case  relied  upon  as  a 
governing  case  at  this  day."  In  the  judgment  as  reported  in  19 
Vesey,  p.  348,  he  puts  it  thus :  "The  prayer  of  the  first  of  'these 
petitions  has  been  supported  upon  this  ground,  that  the  short  bills 
and  the  mortgage  *  *  *  having  been  placed  with  Brickwood  and 
Co.  as  a  security  against  their  acceptances,  the  holders  of  those  bills 
have  an  equity  to  have  that  security  applied  specifically  to  the  dis- 
charge of  those  acceptances  upon  the  general  ground  that,  upon 
a  transaction  of  this  kind,  a  person  holding  the  bills  which  are  the 
subject  of  indemnity  has  a  right  to  the  benefit  of  the  contract  be- 
tween the  principal  debtor  and  the  party  indemnified,  and,  though 
not  himself  a  party  to  that  contract,  to  say  that  he,  who  has  con- 
tracted for  the  payment  of  certain  debts  out  of  those  pledges,  is 
liable  in  equity  to  the  demand  upon  the  part  of  those  whose  de- 
mands are  to  be  so  paid  for  that  application,  and  a  case  was  cited 
(Maure  v.  Harrison)  which  goes  that  length.  With  regard  to  that 
case,  or  cases  in  general,  I  desire  it  to  be  understood  that  I  forbear 
to  give  my  opinion  upon  that  point."  Then  he  goes  on  to  say  that 
he  decides  not  on  Ex  parte  Waring  but  on  another  ground.  The 
result  of  these  two  cases,  namely  the  dictum  of  Sir  W.  Grant  in 
IVright  V.  Morley  and  the  judgment  and  observations  of  Lord 
Eldon  in  Ex  parte  Waring,  seems  to  me  to  be  that  Sir  W.  Grant 
and  Lord  Eldon  were  not  of  the  same  mind  on  the  point.  Under 
these  circumstances  I  was  very  anxious  to  discover  what  was  really 
done  in  the  case  of  Maure  v.  Harrison,  which  it  so  shortly  reported 
in  Eq.  Gas.  Abr.  The  registrar  has  been  kind  enough  to  make 
search  for  that  case.  No  decree  was  drawn  up,  but  the  entry  of 
the  case  has  been  found  in  the  registrar's  book,  and  the  pleadings 
have  been  discovered,  and  I  am  indebted  to  the  learned  reporter 
of  this  court,  Mr.  Knox,  for  having  made  a  summary  of  them  for 
my  use,  the  pleadings  themselves  being  somewhat  lengthy.  From 
them  and  the  notes  in  the  registrar's  book  it  is  tolerably  easy  to  dis- 
cover what  the  case  was.  The  plaintiff  was  Thomas  Maure,  the 
defendants  were  William  Harrison  and  William  Modey  and  Mary 
his  wife.  Thomas  Maure  was  the  father  of  the  first  wife  of  Will- 
iam Harrison,  the  father  of  William  Harrison  the  defendant.     By 


3.    2G.  &  J..  404;  19  Ves.  3^5. 


■284  GUARANTY  AND   SURF.TYSIIIP. 

that  first  marriat;c  William  I  larrison  the  father  had  three  children, 
viz.,  William,  the  defendant,  Thomas,  and  Mari^aret.  The  first 
wife  having  died,  William  Harrison,  the  father,  married  his  second 
wife  Mary,  the  defendant,  then  tiie  wife  of  William  .Maure,  and 
afterwards  he  died  intestate  leaving  this  widow  and  three  children 
by  the  first  wife  tlie  persons  entitled  to  his  ])ersonal  estate  under 
the  statute  of  distribution.  Administration  was  taken  out  by  his 
widow,  and  the  shares  of  the  three  children  in  the  intestate's  prop- 
erty amounted  to  120/.  It  appears  that  the  plaintifif,  Thomas 
Maure,  the  grandfather  of  William  Harrison  the  defendant,  was 
very  anxious  that  William  Harrison,  his  grandson,  should  con- 
tinue the  business  of  a  farmer  which  had  been  carried  on  by  Will- 
iam Harrison  the  father,  but  for  that  purpose  it  was  necessary  that 
the  sum  of  120/.  which  fomied  the  portion  of  the  intestate's  estate 
belonging  to  the  three  children  should  l^e  paid  over  to  William 
Harrison  the  son,  and  that  was  accordingly  done.  The  two  other 
children  being  infants,  Thomas  Maure  the  father  and  the  plaintifif 
in  the  action  gave  a  bond  to  the  defendant  Mary  IMorley,  the  legal 
personal  re]>resentative  of  the  intestate,  to  indemnify  her  against 
all  claims  by  those  children.  It  appears  that  at  this  time  William 
Harrison,  the  defendant,  was  an  infant,  but  the  money  was  paid  to 
him.  He  attained  twenty-one,  and  carried  on  the  farm  for  some 
time.  After  attaining  twenty-one  he  repudiated  the  transaction 
and  l)egan  to  press  William  Morley  and  Mary  his  wife  for  pay- 
ment of  his  shai^e  of  his  father's  estate,  which  he  had  already 
received  in  })oint  of  fact,  though  apparently  an  infant.  There- 
upon William  Morley  gave  liim  a  bond  for  payment  of  his  share, 
and  William  Morley  and  Mary  his  wife  began  to  sue  the  plaintifif 
Thomas  Maure  in  the  Court  of  Exchequer  for  payment  under  the 
bond  which  had  been  given  by  him.  Thereupon  the  plaintiff  insti- 
tuted this  suit  in  equitv  to  restrain  the  action,  and  to  obtain  delivery 
up  of  the  l)ond  which  had  been  given  by  him.  Now,  of  the  other 
children  who  were  interested  in  the  intestate's  estate,  Thomas  had 
died  an  infant  and  intestate,  and  Margaret  was  still  an  infant,  and 
was  not  a  party  to  the  suit.  The  argument  is  stated  in  the  regis- 
trar's book.  It  is  to  be  observed  that  the  bill  is  by  the  person  who 
gave  the  bond  to  be  relieved  of  it,  and  the  result  is  thus  stated  in 
the  registrar's  book :  "By  the  Court ;  Do  declare  that  the  defendant 
William  is  well  paid,  and  he  must  deliver  up  the  bond  to  the  other 
defendant."  That  is  the  bond  (as  1  read  it)  which  had  been  given 
b\-  William  Morley  to  the  defendant  William  Harrison  for  pay- 


RE  WALKKR,  F.TC,  VS.  CI  .\^  ro\\  285 

ment  of  his  share.  Whether  that  relief  ought  to  have  been  in- 
serted in  the  decree  may  be  a  question,  because  that  would  be  relief 
between  co-defendants.  Then  it  goes  on,  "stay  all  proceedings  at 
law  on  the  plaintiffs'  lOo/.  bond" — that  is  a  mistake,  for  120/.  as 
clearlv  appears  from  the  previous  passage  in  the  registrar's  note, 
where  it  is  corrected  in  the  margin,  but  the  correction  is  omitted 
here — "till  Margaret  doth  release,  and  when  the  plaintiff  hath  pro- 
cured Margaret,  who  is  not  a  party  to  the  action,  to  release  that 
bond,  then  that  bond  to  be  delivered  up"  and  so  forth  "but  then 
the  plaintiff's  bond  to  be  at  fuit  for  the  recovery  of  Margaret's 
moietv  of  120/."  So  that  all  that  was  decided  in  that  action  was 
that  the  plaintiff',  who  had  given  Ins  bond  of  indemnity,  was  not 
entitled  to  liave  it  delivered  up  to  be  cancelled  till  all  claims  had 
been  settled.  Under  these  circumstances  it  appears  that  the  point 
for  which  it  was  cited  in  Eq.  Cas.  Abr.  could  not  have  been  decided 
in  that  case,  and  that  at  mosr  the  reporited  statement  amounts  to  a 
dictum  in  the  course  of  the  argument.  It  is  now  nearly  two  hun- 
dred vears  since  this  case  was  decided,  and  the  sole  authorities  on 
a  point  which  must  have  been  of  frequent  occurrence  are  a  dictum 
in  1692,  a  dictum  early  in  this  century  by  Sir  William  Grant  in 
the  year  1805,  and  what  appears  to  me  to  be  the  contrary  opinion 
of  Lord  Eldon  a  little  later.  Under  those  circumstances  it  seems 
to  me  that  there  is  no  authority  for  the  proposition  in  question. 
Upon  principle  I  cannot  see  why  a  surety  who  takes  from  the  prin- 
cipal debtor  a  bond  or  indemnity  at  once  becomes  a  trustee  of  that 
for'  the  principal  creditor.  That  is  really  the  contention  of  the 
plaintiffs.  Of  course  the  other  doctrine  is  well  established,  viz., 
that  the  surety  who  pays  the  debt  is  entitled  to  stand  in  the  place 
of  the  principal  creditor ;  but  this  doctrine  rests  entirely  on  those 
dicta  which  I  have  mentioned.  It  seems  to  me  that  under  these 
circumstances  I  cannot  give  effect  to  the  contention  of  the  plain- 
tiffs, and  that  they  must  simply  be  left  to  prove  against  the  estate 
of  the  testator  for  what  is  due,  w'ithout  having  the  exclusive  bene- 
fit of  these  securities  in  respect  of  which  payments  have  been  made 
to  the  estate. 

Solicitor's  for  the  plaintiff  company.  Pilgrim  and  Phillips. 

.Solicitors  for  the  defendants,  Fciv  and  Co.,  agents  for  John: 
James,  Wirksworth. 


286  GITARAXTV  AND   SUR1:TVSHIP. 

Tki M  i:li-;  z's.  Ruuv    (  1901 ) . 
.  .  Ky ,53  1..  R.  A.  353  ;  60  S.  \V.  650. 

Appeal  by  plaintiff  from  a  jud^incnl  nf  ihc  Circuit  Court 
for  Henderson  county  in  favor  of  defendant  in  an  action  to  en- 
force a  promise  by  defendant  to  reimburse  plaintiff's  assignee  for 

the  amount  which  Ik-  had  ])aid  as  surety  for  defendant's  husband. 
Affirmed. 

'Idle  facts  are  stated  in  the  (i])inii)n. 

.1//'.  /v.  //.  CiDuiiHi^liaui,  for  appellant. 
Mr.   Monti^oiiicry  Mcrritf,  for  appellee. 

O'Rf.ar,  j.  While  api)ellee  was  a  married  woman,  and  be- 
fore the  enactment  of  our  present  married  women's  act,  appellant 
H.  S.  Holloway,  who  was  her  kinsman,  executed  to  the  Planters' 
liank  a  note  for  $2,500,  and  one  to  the  Farmers'  Bank  for  $900, 
as  surety  of  appellee's  husband.  Appellant  claims  that  he  was 
induced  to  incur  these  liabilities  by  appellee's  personal  assurances 
or  promises  of  indemnity  against  loss,  and  that  he  would  not  have 
done  so  but  for  his  reliance  upon  her  agreement  to  keep  him  from 
loss  on  that  account.  Idie  husband  died  in  1893,  after  appellant's 
liability  had  been  assumed,  and  left  an  estate  totally  insolvent. 
After  the  husband's  death  appellee  wrote  appellant  asking  him  to 
pay  off  the  notes  in  question,  and  again  promising  to  indemnify 
him  against  loss.  Appellant  did  pay  off  these  notes,  because,  he 
says,  of  this  solicitation  and  promise.  Appellee  declining  to  com- 
ply with  her  agreement  to  repay  the  surety  these  sums  paid  by 
him,  he  sued  her  on  the  last-named  or  written  promise  to  pay. 
Other  allegations  were  contained  in  the  ]:>etition,  but  were  denied, 
and,  there  being  a  total  failure  of  proof  as  to  those  that  were 
denied,  we  are  to  determine  whether  the  trial  court's  peremptory 
instruction  to  the  jury  to  find  for  the  defendant  was  proper.  The 
determination  of  that  ciuestion  involves  the  one  whether  the  prom- 
ise of  a  married  woman,  made  while  under  the  disability  of  cover- 
ture, inducing  another  to  become  bound  as  the  surety  of  her  hus- 
band, is  a  suflficient  consideration  to  su])port  a  promise  of  indem- 
nity made  to  the  surety  after  the  removal  of  such  disability. 

It  is  argued  for  appellant  that  her  original  ])romise  was  based 
upon  facts   imposing  upon  her  a   moral  obligation,  and  that  al- 


TRIMBLE  VS.   KVDY.  287 

though  not  legally  binding  because  the  law  prohibited  her 
from  legally  binding  herself,  upon  the  law's  restrictions  being 
removed  the  original  moral  obligation  was  enough  to  support 
a  new  promise  to  pay.  While  formerly  extensively  held  that 
a  moral  obligation  was  a  sufficient  consideration  to  uphold  a  con- 
tract between  competent  parties,  it  has  lately  come  to  be  denied, 
until  it  may  now  be  seriously  doubted  whether  the  ancient  rule 
longer  obtains.  Bishop,  Contr.  44,  and  cases  cited ;  Parsons, 
Contr.  432,  435,  and  notes.  It  has  been  held  in  this  state  that  a 
moral  obligation,  where  it  has  also  been  a  legal  one,  might  be  the 
consideration  of  a  new  contract  {Montgomery  v.  Laiiipton,  3 
Met.  520;  Mitir  v.  Gross,  10  B.  Mon.  282)  ;  but  we  are  not  aware 
that  the  rule  has  been  extended  further,  and,  in  the  light  of  the 
trend  of  the  later  cases,  we  are  disinclined  to  so  extend  it. 

We  have  repeatedly  held  that  the  contract  of  a  married 
woman,  not  with  reference  to  her  separate  estate,  and  where  not 
especially  allowed  by  statute,  was  void,  and  that  her  subsequent 
promise  to  pay  such  an  obligation,  made  after  discoverture,  was 
likewise  void, — the  first,  because  she  was  not  competent  to  make 
the  contract;  the  second,  because  there  was  no  consideration  to 
support  it.  .Ro}?inson  v.  Robinson,  ii  Bush,  179;  Jennings  v. 
Crider,  2  Bush,  322,  92  Am.  Dec.  487 ;  Russell  v.  Rice,  19  Ky.  L. 
Rep.  1613,  4.4  S.  W.  no:  Chaney  v.  Flynn.  2  Ky.  L.  Rep.  417; 
and  others. 

Wc  think  the  fair  deduction  from  the  foregoing  line  of  de- 
cisions is  that,  without  reference  to  what  may  have  been  the  merit 
of  the  consideration  of  the  original  promise,  the  new  contract,  to 
be  binding,  must  be  based  upon  a  new  consideration,  legal  and 
sufficient  of  itself,  and  independent  of  the  original  one.  That 
the  surety  paid  off  these  notes  upon  the  faith  of  the  appellee's  letter 
was  not  such  new  consideration ;  for  he  assumed  no  new  condi- 
tion, and  did  nothing  he  was  not  already  legally  bound  to  do. 

It  follows  that  the  giving  of  the  peremptory  instruction  was 
proper,  and  the  judgment  is  therefore  affirmed. 


28S  GUARAXTV   AND   SUUKTVSHIP. 

Vai[,  vs.  Fostf.r  ('/  al.  (1850). 
4  N.  Y.  312. 

Varick  &  Eldridgc,  for  appellants. 

1J\  J.  Street,  for  respondents. 

Bkoxson,  Ch.  J.  The  case  is  shortly  this.  The  jilaintiffs 
sold  land  to  IMorgan,  who,  instead  of  giving  his  bond  and  mortgage 
to  the  plaintiffs  to  secure  the  purchase  money,  got  Flagler  to  give 
his  note  to  the  plaintiffs  for  the  amount,  payable  in  one  year ;  and 
Morgan  gave  a  bond  and  mortgage  to  Flagler  for  his  indemnity, 
for  the  same  amount,  and  payable  at  the  same  time  with  the  note. 
Before  the  credit  expired  Flagler  became  insolvent  and  the  plain- 
tiffs seek  relief,  either  on  the  ground  of  an  equitable  lien  on  the 
land  for  the  purchase  money,  or  by  reaching  the  mortgage  to 
Flagler,  and  leaving  it  foreclosed  for  the  payment  of  the  debt. 

By  taking  the  security  of  a  third  person  for  the  purchase 
money  the  plaintiffs  have  lost  their  equitable  lien  on  the  land,  and 
can  not  have  relief  in  that  form,  as  has  been  ver^^  clearly  shown  by 
the  vice-chancellor  in  his  opinion.  And  I  agree  in  most  that  he  has 
said  upon  the  whole  case.  But  there  is  one  point  on  whicli  I  think 
the  supreme  court  was  right  in  reversing  the  vice-chancellor's 
decree,  and  directing  a  foreclosure  of  the  mortgage  for  the  benefit 
of  the  plaintiffs. 

It  is  a  settled  rule  in  equity,  that  the  creditor  shall  have  the 
benefit  of  any  counter  bonds  or  collateral  securities  which  the  prin- 
cipal debtor  has  given  to  the  surety,  or  person,  standing  in  the  situ- 
ation of  a  surety,  for  his  indemnity.  Such  securities  are  regarded 
as  trusts  for  the  better  security  of  the  debt,  and  chancery  will 
compel  the  execution  of  the  trusts  for  the  benefit  of  the  creditor. 
Matire  v.  Harrison,  i  Eq.  Cas.  Ab.  93,  K.  5  ;  Curtis  v.  Tyler,  9 
Paige,  47,2;  Wright  v.  Morley,  tt  Ves.  22;  Bank  of  Auburn,  v. 
Throop,  18  John,  505 ;  4  Kent,  307,  6th  ed. ;  t  Story's  Eq.  §§  502, 
638.  This  principle  covers  the  case:  and  the  plaintiffs  are  entitled 
to  the  mortgage  which  Morgan,  the  princi]:)al  debtor,  gave  to 
Flagler,  the  surety,  for  his  indemnity. 

But  it  is  said  that  Morgan  is  not  a  debtor  to  the  plaint itts,  and 
consequently  that  the  relation  of  principal  and  surety  does  not 
exist  between  him  and  Flagler.  It  is  true  that  Morgan  did  not 
unite  with  Flagler  in  making  the  note,  nor  did  he  come  under  any 


DOBIE    VS.     FID.    &    CAS.    CO.  289 

Other  express  obligation  to  the  plaintiffs.  But  he  was  originally  a 
debtor  to  the  plaintiffs  for  the  price  of  the  land  :  and  although  the 
plaintiffs  afterwards  took  tlie  note  of  Flagelr  in  lieu  of  the  bond 
and  mortgage  of  Morgan,  they  took  it  as  a  security  only  for  the 
purchase  money,  without  agreeing  to  receive  it  in  satisfaction  of 
the  debt.  Taking  the  note  of  a  thiid  jjerson  for  an  existing  debt 
is  not  payment,  unless  the  creditcjr  agrees  to  receive  it  in  payment ; 
and  I  find  no  such  agreement  in  this  case.  -Morgan  is  still  liable 
to  the  plaintiffs  for  the  purchase  money,  and  must  of  course  be 
regarded,  as  the  principal  debvor ;  for  it  is  entirely  clear,  upon  the 
pleadings  and  proofs,  that  Magier  gave  the  no/e  at  the  request,  and 
as  the  surety  of  ^^lorgan.  witliout  having  any  personal  interest  in 
the  matter.  We  have  then  the  ordinary  case  of  creditor,  principal 
and  surety,  to  whicli  the  rule  in  question  has  been  applied  :  and  the 
mortgage  which  the  principal  debtor  has  given  to  the  suretv  must 
be  considered  as  a  trust  for  the  better  security  of  the  debt,  which 
a  court  of  equity  will  enforce  for  the  benefit  of  the  creditor. 

Foster  &  Co.  under  their  creditor's  bill,  took  the  effects  of  Flagler 
subject  to  this  equii}- ;  and  tliere  is  no  l)0na  fide  purchaser  in  the 
case. 

I  am  of  opinion  that  the  decree  of  the  supreme  ctnnt  is  right, 
and  should  be  affirmed. 

Decree  affirmed. 


DOBIE  Z'S.  F"lDFLITY  &  Ca.SUALTY  Co.  OF  NrW  YoRK   (1897). 

95  Wis.  540 :  70  N.  W.  482. 

Suit  by  David  Dobie  against  the  Fidelity  &  Casualty  Company 
of  New  York  to  compel  defendant  to  exonerate  plaintiff  from  lia- 
bility on  an  appeal  l:iond.  From  a  judgment  for  plaintiff'  on  the 
pleadings,  defendant  appeals.     Affirmed. 

One  Knute  Anderson  obtained  a  judgment  against  ]\I.  C. 
Burke  and  John  Burke.  The  action  was  for  personal  injuries. 
The  Fidelity  &  Casualty  Company  was  an  insurer  of  the  Burkes 
against  such  claims,  and  was  defending  the  action.  It  procured 
Dobie  and  Tennis  to  become  sureties  on  the  appeal,  and  gave  them 
its  own  bond  in  the  sum  of  $7,000  to  indemnif}-  them,  conditioned 


290  GUARANTY    AXD  SURETYSHIP. 

to  "answer  for  all  daniagcs.  interest  and  costs,  if  an)-,  that  shall  be 
adjudged"  against  the  appellant,  and  "to  save  Tennis  and  Dobie 
hannless  from  all  costs  and  damages  on  account  of  their  obligation 
as  sureties."  Judgment  was  against  the  appellant  on  the  appeal, 
and  Tennis  and  Dobie  became  liable  on  their  undertaking.  No 
part  of  the  judgment  has  been  paid.  The  plaintiff  brings  this 
action  to  compel  the  defendant,  the  Fidelity  &  Casualty  Company, 
to  pay  the  judgment,  and  so  exonerate  the  plaintiff  from  liability. 
The  plaintifif  had  judgment  upon  the  pleadings,  according  to  the 
demand  of  his  complaint,  and  the  defendant  appeals. 

Ross,  Dzvyer  &  Hanitcli,  for  appellant. 
Thorson  &  Craivford,  for  resjiondent. 

Xewman,  /.  (after  stating  the  facts).  The  question  pre- 
sented is  whether  the  complaint  states  a  cause  of  action]  The 
action  is  l)y  a  surety  to  compel  his  princi])al  to  ])ay  the  debt  for 
which  both  are  liable,  for  the  exoneration  of  the  surety.  It  is 
ultimately  the  defendant's  liability.  That  party  is  the  principal 
debtor,  who  is  ultimately  liable  for  the  debt.  The  question  is 
whether  a  surety  can,  in  equity,  compel  his  principal  to  exonerate 
him  from  liability  ,  by  extinguishing  the  obligation,  without  having 
first  paid  it  himself.  It  seems  to  be  well  settled  that  a  surety  against 
whom  a  judgment  has  been  rendered  may,  without  making  pay- 
ment himself,  proceed  in  equity  against  his  principal  to  subject  the 
estate  of  the  latter  to  the  pa\-ment  of  the  debt,  in  exoneration  of  the 
surety.  2  Beach,  Eq.  Jur.  §  903  ;  3  Pom.  Eq.  Jur.§  1417 ;  Will.  Eq. 
Jur.  J 10:  i'nited  Nezv  Jersey  Railroad  &  Canal  Co.  v.  Long  Dock 
Co.,  38  X.  J.  Eq.  142;  Beaver  v.  Beaver,  23  Pa.  St.  167;  Gibhs  v. 
Mennard,  6  Paige,  258  ;  Warner  v.  Beardsley,  8  Wend.  194  ;  7  Am. 
&  Eng.  Enc.  Law,  486,  cases  in  note.  Th;-  judgment  of  the 
superior  court  of  Douglas  cr)unty  is  afifirmed. 


Bwiyl.'^'* 


INDEX. 


Acceptance,  guarantor  entitled  to  notice  of,  when,  8,  123. 

notice  of,  when  necessary,  61,  120. 

when  necessary  to  complete  contract,  120. 
Accommodation  Indorsek,  breach  of  warranty,  recoupement,  or 

counter  claim  no  defense  in  favor  of,  215. 
Action,  cause  of.  accrues  as  against  surety  when,  270. 

for  contribution,  against  whom,  48. 

for  contribution  arises  from  implied  undertaking,  274. 

for  indemnity  when  accrues,  48. 

not  maintainable  on  oral  promise  when,  191. 

when  lies  against  principal,  promise  of  third  person  within 
statute,  183. 

when   none  lies   against  party   undertaken   for,   promise   of 
third  person,  within  statute,  184. 
Adjudication,  against  principal,  effect  upon  surety,  241. 
Aliquot-part,  measure  of  recovery,  278-279. 

basis  of  detennining  in  actions  for  contribution,  280-281. 
Alteration,  of  principal's  contract,  effect  on  surety,  50,  106,  137, 
244,  246. 

of  bond,  when  a  defense,  251. 

of  bond  by  act  of  legislature,  239. 
Another  Person,  promise  to  answer  for  debt  of  void  if  not  in 
writing,  149. 

promise  to  pay  debt  of,  made  to  creditor,  17.^. 

debt  of,  oral  promise  to  pay  within  statute,  132. 

debt  of,  promise  to  pay,  162-163. 

Bank,  right  of  to  apply  depositor's  account  to  satisfaction  of  hi's 
debt,  222-4. 
absolute  owner  of  money  deposited,  222.  .oijoii 

a  debtor  to  depositor,  222.  noil'JK 

Blanks  in  bond,  authoritv  to  fill,  251.  J  vJilrdBiF 

Bond,  form  of,  194.  '  '  ";''\  V'i^}^\^'^^ 

form  of  condition,  248.  '''^^^  ^^'  "^S"" 

blanks  in,  authority  to  fill,  251.  .■''"  '"^"^.^  ^^^"'-^'^  '. 

alteration  of  by  statute,  effect  on  sut'e^fj^i(fp^^^'^"^'^'^ 
alteration  of  when  a  defense,  245,  2c,i."'tolmt  .?/Anmr}?.-o'J  • 
official,  right  of  legislature  to  alter.  ^3c/;j<'  no'Hudhinoo         j 

i-j'/^in  Lriijod  saiJTrw?.  nariv/ 
i^rrr  ?j  '>no  n^rlv/  i o  v:til}d£fl' 


292  iNnr.x. 

Bon  d —  Continued. 

si.i^ier  lK)un(l  to  know  coiUl-iU^.  unless  prevented  by  fraudu- 
lent device,  199. 

for  security  for  public  work,  statute  concernino-.  function  of. 
48. 

required  of  contractors  for  public  works,  43. 

penalty  of,  as  limit  of  liability,  55. 

Collateral,  see  promise. 

Collection,  guaranty  of  what  amounts  to,  82. 

Composition,  of  debt  secured,  affects  surety  how,  210-211. 

Concealment,  of  material  facts  ground  for  invalidating  contract, 

Condition,  of  bond,  form  of,  248. 
CoN-SiDERATiON,  must  be  proved,  74. 

what  constitutes,  58. 

failure  of  may  be  shown  by  surety,  when,  213. 

mutual  obligations  of  parties  as,  105. 

what  is  sufficient,  111-112. 

of  guaranty,  58. 

whether  moral  obligation  is  sufficient,  286-287. 

Construction,  of  guaranty,  58,  106. 

rule  of,  as  to  whether  guaranty  is  for  single  or  continuous 

dealing,  88. 
relation  of  parties  and  circumstances  enter  into,  88. 
to  give  effect  to  intention  of  parties,  24,  136. 
Contract,  of  guaranty  collateral,  2. 
of  suretyship  direct,  2. 

of  surety  and  guarantor  contrasted,  2,  6-8,  22-24,  26-27. 
Contractor,  for  public  work,  bond  required  of,  48. 
Contribution,  measure  of  recovery  in  action  at  law,  280. 
when  right  to  accrues,  280. 

action  for  arises  from  implied  undertaking,  272. 
action  for  arises  not  by  force  of  express  contract,  272. 
liability  for,  in  action  at  law%  278. 
liability  for,  suits  in  equity,  278. 
origin  of  doctrine  of,  272. 

results  from  maxim  that  equality  is  equity,  272. 
co-sureties  entitled  to,  255. 
Co-sureties,  indorsers  may  be,  mtcr-scse,  275. 

contribution  betw^een,  of  equitable,  origin,  272. 
when  sureties  bound  severally  are,  255. 
liabilitv  of  when  one  is  insolvent,  258. 


INDEX. 


293 


Creditor,  entitled  to  benefit  of  collateral  securities,  when,  288. 
dealings  of  with  continuing-  partner  discharges  surety,  when, 

36-37. 
how  bound  to  respect  rights  and  equities  of  surety,  36. 
failure  to  use  money  within  his  control  in  payment  of  his 

claim,  effect  of,  223. 
diligence  required  of,  96-97. 
must  show  notice  of  acceptance,  when,  122-123. 
failure  of,  to  sue  debtor  at  surety's  request,  219. 
bound  to  diligence  to  exonerate  surety,  220. 

Debt  of  another,  promise  to  pay,  within  the  statute,  132,  171,  174. 
of  another,  promise  to  answer  for,  145. 
of  another,   promise  to   answer   for,   rules   for   determining 

what  is,  145-146. 
of  another,  promise  to  answer  for  not  dependent  upon  form 

of  expression,  147. 
future,  guaranty  of  within  statute,  166. 
none  against  principal,  none  against  surety,  207-208. 
Debtor,  transfer  of  property  to  third  person  in  consideration  of 

agreement  of  debtor  to  pay  the  debt,  157. 
Defalcations,  future,  liability  of  surety  for,  249. 
Default  of  Another,  promise  to  answer  for  within  statute,  182. 
Defense,  based  on  absence  of  liability  of  principal  debtor  to  cred- 
itor, 187-190,  192,  193,  196,  199-200. 
based  on  extinguishment  of  liability  of  principal  to  creditor, 

205,  206,  208. 
based  on  principal's  right  of  counter  claim  against  creditor, 

211. 
based  on  loss  or  surrender  of  securities  by  creditor,  216. 
based  on  refusal  to  sue  debtor,  219. 

based  on  lack  of  notice  to  guarantor  of  acceptance  of  guar- 
anty, 225. 
based  on  creditor's  failure  to  use  money  in  his  control  to  pay 

debt,  221. 
based  on  lack  of  notice  to  guarantor  of  principal's  default, 

235. 
based  on  alteration  of  contract,  238,  239,  245. 
based  on  retention  of  employee  after  knowledge  of  his  dis- 
honesty, 247. 
based  on  fraud  of  principal,  250,  252. 

based  on  dealings  between  creditor  and  co-surety,  25^1.-256. 
breach  of  warranty  recoupement  or  counter-claim  not  avail- 
able as,  to  accommodation  indorser,  213. 


294  INDEX. 

Demand  upon  principal  when  necessary,  21,  22. 
Diligence,  exercise  of  by  creditor  required,  when.  96,  97. 

of  creditor  cannot  be  demanded,  when,  103. 
Dl'kess  a  personal  defense,  199-200. 

to  principal  will  not  avoid  obligation  of  surety,  200. 

Employee,  retention  of  after  knowledge  of  his  dishonesty.  249. 
Equities,  surety's  must  be  respected,  36. 
Exoneration  of  surety  may  be  compelled,  when,  290. 

Forbearance,  effect  of  upon  surety,  26. 

a  sufficient  consideration,  111. 
Fraud  of  principal  towards  surety,  251-252. 

of  principal  when  no  defense  to  surety,  253. 
Future  Liability,  guaranty  of  within  statute,  166. 

Guarantee,  neglect  of  to  fix  liability  of  indorser  does  not  dis- 
charge guarantor,  when,  237. 
Guarantor,  may  limit  his  liability,  67. 

notice  to,  when  necessary,  80. 

liability  of,  distinct  from  principal's,  94. 

engagement  of,  individual  contract,  94. 

cannot  be  sued  with  his  principal,  94. 

of  collection,  obligation  of,  discharged  when,  96. 

discharged  by  laches,  when,  97. 

of  payment,  position  of  that  of  surety,  loi. 

of  payment  contrasted  with  guarantor  of  collection,  96. 

distinguished  from  surety,  77-78. 

entitled  tc  notice,  when,  123. 

entitled  to  notice  of  liability  within  reasona1)lc  time  ahw  tran- 
sactions are  closed,  yy. 

contract  of,  contrasted  with  surety's,  2. 

and  surety,  difference  between,  7. 

of  payment,  24. 

absence  of  notice  to,  of  acceptance  of  guaranty,  232. 
Guaranty,  defined,  93. 

special,  consideration  necessary  to  support,  66. 

special,  a  trust  in  the  promisee.  66, 

special,  not  assignable,  66. 

special,  as  to  persons,  80. 

general,  66. 

limited,  67. 

limited  as  to  amount,  90. 


INDEX.  1'96 

•Guaranty — Continued. 

continuing,  65,  225. 

continuing,  what  amounts  to,  85-86. 

continuing,  what  doesi  not  amount  to,  88. 

absohite,  defined,  94. 

absokite  instrument    amotmting  to,  234. 

absohite,  form  of,  98. 

notice  of,  when  necessary,  78. 

of  collection,  what  aniomits  to,  83. 

of  collection  distinguished  from  guaranty  of  payment.  96. 

when  obligation  matures,  82,  96.  , 

for  single  dealing,  form  of,  87. 

construction  of,  rules  governing,  91,  140. 

of  payment,  form  of,  92,  98. 

of  payment  defined,  96. 

of  payment,  scope  of,  94. 

of  payment  not  discharged  by  principal's  failure  to  take  pro- 
ceedings against  creditor,  236. 
nor  by  neglect  to  fix  liability  of  indorser,  237. 

of  payment  an  undertaking  without  condition,  236. 

of  payment  distinguished  from  guaranty  of  collection.  96. 

undertaking  of,  contrasted  with  that  of  surety,  loi. 

contract  of,  incomplete  without  acceptance,  120. 

contract  of,  made  only  by  n.uitual  assent  of  parties,  120. 

an  ofifer  or  proposal,  when,   120. 

distinguished  from  indemnity,  153. 

not  enlarged  by  construction,  106. 

contract  of,  collateral,  2. 

contract  of,  differs  how  from  other  contracts,  58. 

right  to  revoke,  3. 

construction  of,  58. 

when  unaccepted  proposal,  230. 

when  a  complete  obligation,  230. 

and  suretyship,  distinction  in  form,  7. 

Impltcatign,  nothing  can  be  added  by  way  of,  26. 
Indemnity,  action  for,  when  accrues,  270. 

whether  moral  obligation  is  sufficient  to  support  promise  of, 
286. 

promise  of,  must  be  supported  by  valid  consideration,  287. 

securities  taken  for,  trusts,  288. 

retiring  partner's  right  to,  36. 

distinguished  from  guaranty,    153. 

rmplied  promise  of,  286. 

oral  promise  for,  valid  when,  170. 


296  INI3KX. 

IxDORSERS,  Haliility  of  iiircr-scsc  shown  by  parol.  276. 

contrasted  with  guarantors.  39. 
IxiAXT,  contract  of,  voidable  only  at  election  of,   191. 

promise  to  answer  for  debt  of,    kji. 

surety  on  contract  of,  liable.  193. 
T\  ri-:ki:s'r  in  transaction  as  affecini^  ebaraclcr  of  iironn'se,  145. 

Jl'lk;.mf.nt  against  principal,  liou   far  binds  surety,  240. 

LAHokKus.  l)ond  for   protection  of.  53. 
Letter  of  Credit,  general,  defined,  A8. 

special,  defined,  63. 
LfAniLiTV,  absence  of,  of  pi'incipal  debtor  to  creditor,   195. 

of  surety  not  affected  by  composition  of  debt,  when,  209. 

third  person  must  be  discharged  from,  to  take  promise  out 
of  statute.  ]86. 

])enalty  named  in  liond,  limit  of,  254. 
Lc.XA'iic,  surety  on  contract  of,  lial-le,  193. 

Married  Wo^rAN,  surety  on  contract  of.  liable,  188-189. 

contract  of,  void  where  not  allowed  by  statute,  287. 

promise  of.  made  after  discoverture  void,  when,  287. 

promise  of,  must  be  on  new  consideration,  287. 
M  ATKRiM.  Men,  bond  for  protection  of,  53. 
Miscarriage  of  another,  promise  to  answer  for  collateral.  133. 

meaning  of  term,  133. 
MiscoNDL'CT  of  principal,  how  affects  surety,  251.  253. 
Moral  Oni.iCATiox  as  sufficient  consideration  to  support  ]iromise 

of  indemnity,  286. 
M  r.xitii'AiJTV,  surety  on  obligation  of,  liable  when,  197-198. 

XoTiCE  of  acceptance,  when  necessary,  61. 
to  guarantor  of  principal's  default,   lOO. 
to  guarantor  of  acceptance  of  guaranty,  228. 
absence  of,  when  defense  to  gnar.uiior.  234. 
necessary,  when,  230. 
necessary,  why,  230. 
guarantor  entitled  to.  when,  jj,  123. 

Or,rJG.\Ti().\  of  surety  not  avoided  bv  duress  of  ])rincipal.  200. 

none  implied  against  surety.   1 36. 
Oral  Promise  to  answer  for  debt  of  another.  149. 

invalid  when  debt  reniains  payable  by  debtor.   149. 


INDEX.  297 

Oric.ixal  Undertaking  basis  of  collateral  or  secoiulary  prom- 
ise, 127,  186. 

Payment  by  surety  not  new  consideration,  270. 

guaranty  of,  24. 
Partner  retiring,  surety  wben,  36. 

retiring  cannot  give  note  in  partnership  name  after  dissolu- 
tion, 35. 

retiring  entitled  to  indemnity,  37. 

continuing,    dealings    of    creditor    with,    discharges    surety, 
when,  37. 

continuing  bound  to  indemnify  retiring  partners,  T^y. 

signing  as  principal  without  authority  of  firm.  195. 

binds  co-partners  as  sureties,  when,  195. 
Penalty  stated  in  bond  limit  of  liability,  54,  67,  255. 
Principal,  demand  upon,  when  necessary,  21. 

absence  of  liability  of  to  creditor,  defense  to  surety,  195. 

judgment  against  not  res  judicata  against  surety,  240. 

compelled  to  exonerate  surety,  when,  290. 

irnplied  promise  of,  to  indemnify  surety,  270. 

retention  of,  in  service  after  knowledge  of  his  dishonesty. 
249. 

duty  of,  to  exercise  good  faith  toward  surety,  249. 

fraud  on  part  of,  to  withhold  knowledge  of  employee's  pre- 
vious dishonesty,  249. 

fraud  of,  towards  surety,  251-253. 
Promise,  original,  when,  127. 

original  and  collateral  contrasted,  162,  165,  186. 

coltateral,  within  statute,  184. 

to  indemnify  one  for  becoming  guarantor  whether  or  not 
within  statute,  167. 

consideration  for,  what  sufficient,  168. 

not  within  statute  when  leading  object  is  to  benefit  promisor, 
206. 

for  reimbursement  within  statute,  170. 

to  indemnify  one  for  becoming  surety  for  another,  170. 

to  pay  for  goods  furnished  another,   186. 

to  answer  for  debt  of  another  must  be  made  to  creditor  to  be 
within  statute,  65. 
Promissory  Note  indorsed  by  third  person  presumption  of  lial)il- 

ity,  39- 
indorsement  by  payee  liability  of.  38. 

Recovery  on    guaranty  of  collection,  when,  83. 
Reeormation  of  bond  when  descried  as  against  surety,  290. 


298  iNUKx. 

Security  required  for  labor  and  materials  in  public  works,  43. 

Special  Promise  to  answer  for  debt  of  another,  void  if  not  in 

writing-,  149. 
Strictissimi  Juris,  meaning  of,  106. 

Statute  of  Frauds,  promise  to  answer  for  miscarriage  of  an- 
other, within,  133. 
joint  promise  to  pay  debt  of  one,  126. 
secondary  or  collateral  promises,  within,   127. 
promises,  within,  127. 

oral  promise  to  answer  for  default  of  another,  within,  132. 
oral  agreement  to  share  commissions  and  losses,  not  within,, 

154- 

promise  not  within,  when,  157. 

not  applicable  to  promise  of  third  person  who  receives  money 
or  property  of  debtor,   157. 

promise  to  pay  for  goods  to  be  supplied  to  tliird  persons,  not 
within,  176. 

promise  for  reimbursement,  within,   171. 

applies  only  to  promises  made  to  a  person  to  whom  anotlicr 
is  answerable,  174. 

promise  within,  unless  third  person  is  discharged  from  lia- 
bility, 186. 

promise  to  answer  for  default  of  another,  within,  149. 

promise  within,  when  debt  remains  payable  by  debtor.   149. 

promise  to  answer  for  debt  of  infant,  within,  191. 
Statute  of  Limitations,  debt  barred  as  to  princii)al  barred  as. 
to  surety,  207-208. 

when  runs  upon  surety's  claim  upon  principal  debtor,  270. 

begins  to  run,  when,  270. 
Statute  of  Mich.,  providing  security  for  public  works,  43. 
Statute  of  U.  S.,  providing  security  for  public  works,  48. 

Subrogation,  definition  of,  263. 

not  founded  upon  contract,  263. 

the  creation  of  equity,  263. 

volunteer  or  stranger  not  entitled  to,  263. 

surety  not  entitled  to,  when,  267. 
Surety,  definition  of,  36,  T17. 

contract  of,  direct,  2. 

contract  of,  contrasted  with  guarantor's,  2. 

and  guarantor,  dift'ercnce  between,  7. 

discharge  of,  by  change  in  contract  without  his  consent,  10. 

contract  of,  construction  of,  21. 

not  discharged  by  delay  to  sue,  26. 


INDEX. 


290 


Surety — Continued. 

retiring;  i>artncr.  when  is,  3(>. 

equities  of,  tiuist  be  respected,  36. 

liabiliiv  of,  co-extensive  with  principal's.  30. 

not  1>onn(l  unless  principal  is,  195. 

how  affected  l)y  alteration  of  principal's  bond,  i}^(). 

not  released  by  statutory  change,  239. 

obligation  of,  not  avoided  by  duress  of  principal,  200. 

how'^  affected  by  principal's  loss  or  surrender  of  securities. 

entitled  to  benefit  of  securities  taken  by  creditor.  218. 

how  affected  by  creditor's  failure  to  use  money  within  lii> 
control  in  payment  of  his  claim,  223. 

how  aft'ected  by  bank's  failure  to  ajiply  depositor's  acctnml 
on  principal's  debt,  223. 

released  by  variation  of  contract,  247. 

how   far  bound  by  judq-ment  against  principal,  241. 

fraud  of  principal  towards.  251^-253. 

how  affected  by  misconduct  of  principal,  251    253. 

several  obligation  of,  255. 

liability  of,  amount  stipulated  the  limit.  255. 

discharged,  when,  257. 

discharged  by  release  of  principal,  257. 

discharged  to  what  extent  by  release  of  co-surety.  2<^ 

({uasi  right  of,  to  sukn'Ogation,  267. 

not  released  bv  creditor  of  bankrupt  consenting  to  composi- 
tion. 211. 

release  of,  by  change  in  contract.  50. 

contract  of.  strictly  construed,  50. 

right  of,  to  indemnitv,  270. 

claim  of,  against  principal  debtor  not  liarred  b\    latter's  dis 
charge  in  insolvei:cy,  271. 

how  affected  if  principal  fails  to  sue.  220. 

right  of,  to  expedite  proceedings  against  princii)al,  220. 

collateral    securities   taken    ])y,   are    for   benefit    of   creditor, 
when,  288. 

reforming  instrument  as  against.  260. 

may  compel  principal  to  exonerate  him,  290. 

entitled  to  remedies  of  creditor  against  principal  debtor.  272. 

entitled  to  stand  in  place  of  creditor.  272. 

contrasted  with  indorser,  39. 

imdertaking  of,  contrasted  wdth  that  of  guarantor.   101. 

when  released  by  act  of  .parties  secured,  105. 

entitled  to  securities  held  by  principal.  282. 

contract  of.  not  enlarged  by  construction.  136. 


800  INDEX. 

Surety —  Continued. 

entitled  to  stand  in  place  of  principal  creditor  on  paying  the 
debt,  285. 

concealment  of  facts  will  discharge,  when,  123. 

on  bond  for  public  work,  liability  of,  54. 

debt  of,  barred  if  debt  of  principal  is  barred  by  statute  of  lim- 
itations, 207. 

entitled  to  notice  of  employee's  dishonesty,  249. 
Suretyship,  joint  contract  indicates,  7. 

contract  of,  when  becomes  binding,  8. 

construction  of  contract  of,  21,  105. 

Third  Person,  promise  to  pay  for  goods  supplied  to,  162. 
V^^RiATiox  of  surety's  risk,  239,  247. 


f\  LIST  OF  BOOKS 


PUBLISHED  BY 


Publisher  and  Bookseller  to  the  University  of  Michigan, 
Ann  Arbor. 


Any  book  in  this  list  will   be  sent,  carriage  free,  to  any  address  in   the 
world  on  receipt  of  price  named. 

ANATOMY. —  Outlines  of  Anatomy,  A  Guide  to  the  Dissection  of  the 
Hwnan  Body.  Based  on  a  Text- Book  of  Anatomy.  By  American 
Authors.     54  pages.     Leatherette,  50  cents. 

The  objects  of  this  outline  are  to  inform  the  student  what  structure  are  found  in 
each  region  and  where  the  description  of  each  structure  is  found  in  American  Text- 
Book  of  Anatomy. 

BOWEN. — A  Teachers'^   Course   in    Physical    Training.     By  Wilbur    P. 
Bowen,  Director  of  Physical  Training,  Michigan    State   Normal  Col- 
lege.     A  brief  study  of    the   fundamental   principles   of    gymnastic 
training,   designed  for  Teachers  of  the  Public  Schools.      183  pages. 
43  illustrations.     Cloth,  $1.00. 
CHEEVER. — Select   Methods  in  Inorganic   Quantitative  Analysis.     By 
Byron  W.    Cheever,   A.M.,   M.D.,   late    Acting  Professor  of   Metal- 
lurgy in  the  University  of  Michigan.     Revised  and  enlarged  by  Frank 
Clemes  Smith,  Professor  of  Geology,  Mining  and   Metallurgy  in  the 
State  School  of  Mines,  Rapid  City,  S.  D.      Parts  I.  and  II.     Third 
edition.      i2nio.      $1.75. 
The  first  part  of  this  book,  as  indicated  by  the  title,  consists  of  Laboratory  Notes 
for   a   Beginner's   Course   in   Quantitative   Analysis.     It   considers  the  subjects  of 
Gravimetric   and  Volumetric  Analysis,  for   beginners,  by  means   of   the   chemical 
analysis  of  a  set  of  substances,  properly  numbered,  in  each  case  giving  the  methods 
to  be  followed  in  such  analysis;  also  the  methods  for  calculating  and  preparing 
volumetric  standard  solutions,  generally  following  the  course  ottered  by  Professor 
Cheever  to  his  students.     It  also  considers  the  methods  for  the  determination  of  the 
specific  gravities  of  various  liquids  and  solids. 

Although  a  number  of  the  analyses  contained  in  Part  I.  may  be  of  only  approxi- 
mate accuracy,  and  of  small  commercial  value,  such  are  yet  included  with  a  special 
purpose,  to  wit:— that  they  may  supply  the  student  with  a  wider  range  of  work  and  a 
greater  diversity  of  chemical  manipulation.  This  was  Professor  Cheever's  idea, 
and  it  is  certainly  a  good  one,  especially  since,  in  most  cases,  the  work  of  the  begin- 
ner simply  serves  to  emphasize  the  necessity  of  careful  scrutiny  of  details  and 
methods  for  practical  work  in  the  future. 

Part  I.  is  offered,  then,  for  the  use  of  schools  and  colleges,  and  it  is  intended  to 
supply  a  source  of  elementary  information  upon  the  subject  of  Quantitative  Chemi- 
cal Analysis  rarely  oftered  in  such  form  in  works  upon  that  subject.— Preface. 

The  author  was  for  many  years  Professor  of  Metallurgy  in  the  University  of 
Michigan,  and  the  methods  here  presented  are  those  mostly  oftered  by  hina  to  his 
students.  As  a  beginner's  book  in  quantitative  analysis,  it  will  be  found  eminently 
practical,  and  it  can  be  honestly  recommended  to  the  student  who  desires  a  source 
of  elementary  information  upon  this  branch  of  applied  science.  The  book  is  divided 
into  two  parts,  the  first  consisting  of  laboratory  notes  for  beginners.  The  subjects 
of  gravimetric  and  volumetric  analysis  are  considered  by  means  of  the  chemical 
analysis  of  a  set  of  substances,  properly  numbered,  in  each  case  giving  the  methods 
to  be  followed  in  such  analysis,  and  also  the  methods  of  calculating  and  preparing 
volumetric  standard  solutions,  etc.  Methods  for  the  determination  of  specific 
gravities  of  various  liquids  and  solids  are  also  considered. 

Part  II.  contains  a  number  of  select  methods  in  inorganic  quantitative  analysis, 
such  as  the  analysis  of  limestone,  iron  ores,  manganese  ores,  steel,  the  analysis  of 
coal,  water,  mineral  phosphates,  smelting  ores,  lead  slags,  copper,  arsenic,  bismuth, 
etc.     A  chapter  on  reagents  concludes  the  work. — Pharmaceutical  Era. 

CLASSEN -HARRIMAN.—(0«rt«//A?//T'^  Analysis.  By  Alexender 
Classen,  Director  of  the  Laboratory  of  Inorganic  Chemistry  and 
Electro  Chemistry  in  the  Royal  Technical  School,  Aachen.  Author- 
ized Translation  from  the  Fifth  German   Edition,  with  an  Appendix 


Publications  of  George   IVa/ir,  Ann  Arbor. 

on  the  Qualitative  Analysis  of   Minerals,  Ores,  Slags,  Metals,  Alloys, 
Etc.,  Including  the  Rare  Elements,  by  Norman  F.  Ilarriman,  Assist- 
ant in   Chemistry  in  the    University  of    Michigan.     79    Illustrations. 
Handsomely  bound  in  half  leather,  S4>oo. 
DOCK.— C»/<///««  of  Case  Taking  as  Used  in  the  Medical  Clinic  of  the  Uni- 
versity of  Michigan.     By  George  Dock,  A.  M.,  M.  D.     Professor  of 
Medicine,  University  of  Michigan.     32  pages.     Cloth,  25  cents. 
D'OOGE.— //<f//^   to  the  Study  of  Classical  Mythology;  for  the  Lo'wer 
Grades  and  Secondary  Schools.     By  B.  L.  D'Ooge,  Professor  in  the 
Michigan  State  Normal  College.    12  mo.    180  pages.    Cloth.    45  cents. 
A  bibliography  based  on  practical  eSiperience.     The  author  is  a  professor  in  the 
Michigan  State  Normal  College.    As  the  myths  of  all  nations  manifest  themselves 
firsi  in  religion,  secondly  in  art,  and  third  in  literature,  these  reading  references  are 
grouped  in  the  above  classes.     One  section  is   devoted  to  the  study  of   mythology  in 
the  grades,  and  an  introductory  chapter  gives  hints  for  teaching  the  subject  in  the 
lower  grades.     The  books  suggested  in  the  body  of  the  work  are  given  in  one  alpha- 
bet at  the  end,  with  publishers  and  prices;  there  are  also  blank  pages  for  additional 
references,  and  a  good  general  index.— Pub/ishera  fFee7f(y, 

DOW. — Outlines  and  References  in  European  History.  For  the  use 
especially  of  Students  in  History  I  and  2,  University  of  Michigan. 
Part  I.  From  the  Fourth  to  the  Ninth  Century.  By  Earle  Wilbur 
Dow,  University  of  Michigan.     42  pages.     Pamphlet.     35  cents. 

DOW. Outlines    and    References  in    European    History.      For  the    use 

especially  of  Students  in  History,  i  and  2,  University  of  Michigan. 
Part  II.  From  the  Ninth  to  the  Thirteenth  Century.  By  Earle 
Wilbur  Dow,  University  of  Michigan.  66  pages.  Pamphlet.  35 
cents. 
D^YER. —  Cases  071  Private  International  Laru.  By  John  W .  Dwyer, 
University  of  Michigan.      8vo.      509  pages.      Buckram,  S2. 50. 

This  is  a  very  excellent  collection  of  cases  on  private  international  law  made  by 
Mr.  Dwyer,  covering  a  variety  of  subjects,  and  is  intended  especially  for  the  use  of 
students,  though  certain  to  i)rove  interesting  and  valuable  to  all  practitioners. — Al- 
bany Laiv  lournal. 

The  cases  are  not  new,  many  of  them  are  quite  old,  but  are  well  chosen  with  the 
view  of  illustrating  international  law  where  the  contests  arise  between  parties,  one 
of  whom  is  domiciled  in  this  country,  and  the  other  in  a  foreign  country,  or  between 
parties  residing  in  different  states  in  this  country.  These  cases,  which  have  been 
selected  by  the  author  with  much  good  judgment,  illustrate  with  great  fullness  under 
the  conditions  above  stated  the  law  pertaining  to  marriage,  divnrce.  legitimacy, 
guardians,  administration,  judgments,  corporations,  immovables,  movables,  attach- 
ment, contracts,  statute  of  fiauds,  torts,  procedure.  Also  domicil  of  students, 
sailors,  appientices,  in.sane  persons  infants,  married  women,  commercial  domicil, 
reverter,  domicil  in  uncivilized  countries,  domicil  of  origin  and  choice.  These 
cases  may  well  be  called  leading  cases,  and  will  afford  much  aid  to  the  seeker  of 
information  analogous  to  the  subjects  iu  these  cases  discussed.— C^«^ra/  Laitr 
Journal. 

I  have  examined  with  care  the  copy  of  Prof.  Dwyer's  selected  cases  on  Private 
International  Law,  which  you  sent  me  some  weeks  since,  and  I  have  no  hesitation  in 
saying  that  it  is  the  best  selection  I  have  yet  seen  of  cases  upon  this  subject.  It  is 
especially  satisfactory  on  the  subject  of  'Domicile",  "Administration"  and 
"Guardianship". 

Had  I  not  already  made  a  selection  of  cases  for  the  use  of  my  classes  in  the  Law 
School  cf  the  University  of  Maryland,  I  should  unhesitatingly  select  this  book  as  a 
text-book  for  that  subject  As  it  is  I  find  that  I  am  using  several  of  the  cases 
selected  by  Mr.  Uwyer,  and  have  been  for  some  time. 

HENRY  STOCKBRIDGE, 

Baltimore.  Md. 

I  have  received  and  examined  with  much  fullness  and  interest  the  volume  of 
"Cases  on  Private  International  Law  ",  by  Dwyer.  I  am  much  pleased  with  the 
selection  of  cases,  and  think  the  topics  covered  by  the  cases  are  those  of  most 
interest  and  importance  in  connection  with  the  subject  of  Private  Internationat 
Law.  I  have  taught  Private  International  Law  by  means  of  lectures  for  several: 
years,  and   feel  quite  competent  to  juvlge  of    the   sagacity  in   the  selection  of  the 


Fublicaiions  of  George    JVa/ir,  Ann  Arbor. 

cases,  and  of  the  admirable  arrangement  of  them  in  their  sequential  ordei  by 
Mr.  Uvvyer  in  his  volume  of  cases.  I  can  most  cordially  commend  the  volume,  and 
shall  myself  hereafter  use  it  in  the  Iowa  College  of  Law.  C.  C   COLE, 

Iowa  College  of  Law. 
I  have  examined  with  care  Dwyer's  "  Cases  on  Private  International  Law,"  and 
find  them  judiciously  selected  and  edited.  The  author  has  succeeded  in  presenting 
in  a  small  compass  many  important  decisions  in  which  the  leading  doctrines  of  this 
branch  of  the  law  are  exhibited  and  applied  in  a  manner  to  make  the  book  useful 
alike  to  the  student  and  to  the  practitioner.  I  trust  the  work  will  meet  with  the 
favorable  reception  it  deserves.  GEO.  B.  YOUNG, 

St.  Paul.  Minn. 

DWYER.^Zr/w  and  Procedttre  of  United  States  Courts.  By  John  W. 
Dwyer,  LL.  M.,  author  of  "Cases  on  Private  International  Law." 
Instructor  in  the  Law  Department  of  the  University  of  Michigan. 
8vo.     361  pages.     Bound  in  Buckram,  ^2.75.     Sheep,  $3.50. 

The  purpose  of  this  work  is  to  give  a  brief  and  concise  statement  of  the  organiza- 
tion, jurisdiction  and  practice  of  the  various  courts  of  our  national  government.  It 
is  intended  as  an  elementary  work  for  students  in  law  schools,  students  in  law 
offices  and  for  young  lawyers  who  have  not  received  systematic  instruction  in  this 
subject.  In  stating  the  jurisdiction  of  the  courts,  the  author  has  inserted  a  number 
of  the  decisions  of  the  Supreme  Court.  This  valuable  feature  of  the  book  cannot 
fail  to  commend  itself  to  students  and  instructors  alike.  Similarly,  the  object  of 
the  chapter  on  the  history  of  the  United  States  is  to  remind  the  student  of  the  cir- 
cumstances as  they  existed  at  the  time  our  government  was  formed — to  recall  the 
principal  events  in  our  historical  development,  so  that  the  constitutional  provisions 
may  be  interpreted  in  their  true  light.  The  author  asserts,  truly,  that  a  knowledge 
of  this  branch  of  the  law  is  more  necessary  at  this  time  than  ever  before,  because  of 
the  steady  increase  of  litigation,  arising  from  the  rapid  growth  and  reaching  out  of 
the  business  of  the  country  and  the  bringing  of  certain  questions  within  federal 
control.  The  book  is  exceedingly  well  arranged,  containing  besides  tables  of  cases 
and  tables  of  contents,  a  copious  index.  It  cannot  fail  to  prove  highly  useful  for 
the  purposes  intended.  We  can  heartily  commend  it  to  instructors  and  students. — 
Albany  La-w  Journal. 

DZIOBEK. — Mathematical  Theories  of  Planetary  Motions.  By  Dr. 
Otto  Dziobek,  Privatdocent  in  the  Royal  Technical  High  School  of 
Berlin,  Charlottenburg.  Translated  by  Mark  W.  Harrington,  for- 
merly Chief  of  the  United  States  Weather  Bureau,  and  Professor  of 
Astronomy  and  Director  of  the  Observatory  at  the  University  of 
Michigan,  President  of  the  University  of  Washington,  and  Wm.  J. 
Ilussey,  Assistant  Professor  of  Astronomy  in  the  Leland  Stanford, 
Jr.  University.     8vo.     294  pages.     $3.50. 

The  determination  of  the  motions  of  the  heavenly  bodies  is  an  important  problem 
in  and  for  itself,  and  also  on  account  of  the  influence  it  has  exerted  on  the  develop- 
ment of  mathematics  It  has  engaged  the  attention  of  the  greatest  mathematicians, 
and,  in  the  course  of  their  not  altogether  successful  attempts  to  solve  it,  they  have 
displayed  unsurpassed  ingenuity.  The  methods  devised  by  them  have  proved  use- 
ful, not  only  in  this  problem,  but  have  also  largely  determined  the  course  of  advance 
in  other  branches  of  mathematics.  Analytical  mechanics,  beginning  with  Newton, 
and  receiving  a  finished  clearness  from  Lagrange,  is  especially  indebted  to  this 
problem,  and  in  turn,  analytical  mechanics  has  been  so  suggestive  in  method  as  to 
determine  largely  both  the  direction  and  rapidity  of  the  advancement  of  mathemat- 
ical scienoe. 

Hence,  when  it  is  desired  to  illustrate  the  abstract  theories  of  analytical  mechan- 
ics, the  profundity  of  the  mathematics  of  the  problem  of  the  motions  of  the 
heavenly  bodies,  its  powerful  influence  on  the  historical  development  of  this 
science  and  finally  the  dignity  of  its  object,  all  point  to  it  as  most  suitable  for  this 
purpose. 

This  work  is  intended  not  merely  as  an  introduction  to  the  special  study  of 
astronomy,  but  rather  for  the  student  of  mathematics  who  desires  an  insight  into  the 
creations  of  his  masters  in  this  field.  The  lack  of  a  text-book,  giving,  within  moder- 
ate limits  and  in  a  strictly  scientific  manner,  the  principles  of  mathematical  astron- 
omy in  their  present  remarkably  simple  and  lucid  form,  Is  undoubtedly  the  reason 
why  so  many  mathematicians  extend  their  knowledge  of  the  solar  system  but  little 
beyond  Kepler's  law.  The  author  has  endeavored  to  meet  this  need,  and  at  the 
same  time  to  produce  a  book  which  shall  be  so  near  the  present  state  of  the  science 
as  to  include  recent  investigations  and  to  indicate  unsettled  questions. 


Publicatio7is  of  George    Wahr,  Ann  Arlwr. 

FARRAH  DWYER.— CrtJc'j  on  the  Law  of  Husband  and  Wife.  By 
Albert  J.  Fan  ah,  Dean  of  the  Law  Department  of  the  John  B. 
Stetson  University,  Deland,  Florida,  and  John  W.  Dwyer,  author  of 
Cases  on  Private  International  Law,  and  Listructor  of  Law  in  the 
Department  of  Law  of  the  University  of  Michigan.  8vo.  488 
pages.     Buckram,  S2.50. 

FLORER. — A  Guide  for  the  Study  of  Riehl' s  Burg  A'eideck  and  von 
Jagemann''s  German  Syntax.  By  Warren  Washburn  Florer,  Uni- 
versity of  Michigan.     88  pages.     Pamphlet.     30  cents. 

FLORER. — Biblical  Selections  for  Beginners  in  German.  With  word 
list.  By  Warren  Washburn  Florer,  University  of  Michigan.  Cloth. 
SS  pages.     40  cents. 

FLORER. —  Guide  for  the  study  of  Biblical  Selection.  Containing  questions 
for  conversation  and  grammar  drill.  By  Warren  Washburn  Fiorer, 
University  of  Michigan.     In  press. 

FLORER.—^  Guide  for  the  Study  of  Ileyse's  V Arrabbiata.  With 
Questions  for  Grammar  Review.  By  Warren  W.  F'lorer,  University 
of  Michigan.      Pamphlet.      20  pages.      20  cents. 

FLORER. — Heyse's  L' Arrabbiata.  With  word  list  and  questions  for  gram- 
mar review.  By  Warren  Washburn  Florer,  University  of  Michigan. 
Cloth,  80  pages.     35  cents. 

FORD.— 77/6'  Cranial  Ner'u-s.  12  pairs.  By  C.  L.  Ford,  M.l).,  late 
Professor  of  Anatomy  and  Physiology  in  University  of  Michigan. 
Chart,  25  cents. 

FORD. — Classification  of  the  Most  Important  Muscles  of  the  Human 
Body,  With  Qrigin  Insertion,  Nervous  Supply  and  Principal  Action 
of  Each.  By  C.  L.  Ford,  M.D.,  late  Professor  of  Anatomy  and 
Physiology  in  the  University  of  Michigan.     Chart,  50  cents. 

FRANCOIS. — Les  Aventiires  Du  Dernier  Abencerage  Par  Chateaubri- 
and^ Edited  with  Notes  and  Vocabulary.  By  Victor  E.  F'rancois, 
Instructor  in  French  in  the  University  of  Michigan.  Pamphlet,  35 
cents. 

GRAY. —  Outline  of  Anatomy.  A  Guide  to  the  Dissection  of  the  Human 
Body,  Based  on  Grayi^s  Anatomy.  By  S.  M.  Vutzy,  M.  D.,  Instructor 
in  Osteology  and  Demonstrator  of  Anatomy  in  the  University  of 
Michigan.     54  pages.     Leatherette,  50  cents. 

The  objects  of  the  outline  are  to  inform  the  students  what  structures  are  found 
in  each  region  and  where  the  description  of  each  structure  is  found  in  Gray's  Ana- 
tomy.— Fifteenth  edition,  dated  igoi. 

GREENE. —  The  Action  of  Materials  Under  Stress,  or  Structural  Me- 
chanics. With  examples  and  prcjhlems.  By  Charles  K.  Greene, 
A.M.,  M.E.,  Professor  of  Civil  Engineering  in  the  University  of 
Michigan.     Consulting  Engineer:     Octavo.     Cloth,  $3.00. 

Contents.— Action  of  a  Piece  under  Direct  Force.  Materials.  Beams.  Tor- 
sion. Moments  of  Inertia.  Flexure  and  Deflection  of  Simple  Beams.  Restrained 
Beatns:  Continuous  Beams.  Pieces  under  Tension.  Compression  Pieces:— Col- 
umns, Posts  and  Struts.  Safe  Working  Stresses.  Internal  Stress:  Change  of 
Form.  Rivets:  Pins.  Envelopes:  Boilers,  Pipes,  Dome.  Plate  Girder.  Earth 
Pressure:  Retaining  Wall:  Springs:  Plates.     Details  in  Wood   and  Iron. 


Public  at  iot2S  of  George    Wahr,  Ann  Arbor. 

HERDMAN-NAGLER.— --/  Laboratory  Manual  of  Electrotherapeutics. 
Hy  William  lames  lierdman,  Ph.B.,  M.D.,   Professor  of  Diseases  of 
the  Nervous'System  and  Electrotherapeutics,  University  of  Michigan, 
and  Frank  W.    Nagler,  B.S.,  Instructor  in  Electrotherapeutics,  Uni- 
versity of  Michigan.     Octavo.     Cloth.      163  pages.      55  illustrations. 
$1.50. 
It  has  been  our  experience  that  the  knowledge  required  by  the  student  of  medi- 
cine concerning  electricity  and  its  relation  to  animal  economy  is  best  acquired  Dy 
the  laboratory  method.     By  that  method  of  instruction  each  principle  is  impressed 
upon  the  mind  through  several  separate  paths  of  the  sense  perception  and  a  manual 
dexterity  is  acquired  which  is  essential  to  success  in  the  therapeutic  applications. 
'  This  has  been  the  plan  adopted  for  teaching  electrotherapeutics  at  the  Univer- 
sity of  Michigan.     Every  form  of  electric  modality  that  has  any  distinctive  physio- 
logical or  therapeutical  effect  is  studied  in  the  laboratory  as  to  its  methods  of  gen- 
eration,  control  and  application  to   the  patient.     We  believe  this  to  be  the  only 
practicable  way  for  imparting  the  kind  of  instruction  required  tor   the  practice  ot 
electrotherapeutics,  but  in  our  attempt  to  develop  a  naturally  progressive  and  at  the 
same  time  complete  and  consistent  course  of  laboratory  instruction  we  have  found  it 
a  thing  of  slow  growth.  .  ■    ,  j 

This  laboratory  manual  is  the  final  result  of  our  various  trials  and  experiences, 
and  while  we  do  not  claim  for  it  either  perfection  in  the  arrangement  of  matter  or 
completeness  in  detail,  we  feel  that  the  time  has  come  for  putting  our  plans  in  a  form 
that  will  permit  for  it  a  wider  usefulness  as  well  as  gain  for  it  in  the  intelligent  criticism 
of  the  experienced  workers  to  the  field  which  it  seeks  to  cultivate. -From  Pre/ace. 

HILDNER-DIEKHOFF. — Storm's    Immensee.      Edited    by    Hildner 

and    Diekhoff,    University    of    Michigan.       Cloth.       70    pages.      35 

cents. 
HILDNER-DIEKHOFF.— Z^fiV/r^^'-fW    zu     Storms    Immensee.        Von 

Hildner   und    Diekhoff,    University    of    Michigan.      Pamphlet.      16 

pages.      15  cents. 
HILDNER-DIEKHOFF.— /"rcj/^rtg-  die  Journalisten.     With    notes  and 

questions.     By  Jonathan  Hildner  and  Tobias  Diekhoff,  University  of 

Michigan.     Cloth.     174  pages.     60  cents. 
YiO'SN'EX.I^.— Directions  for  Laboratory  Work  in  Physiology  for  the   Use 

of  Medical  Classes.     By  W.  H.  Howell,  Ph.D.,  M.D.,   Professor   of 

Physiology  and  Histology.     Pamphlet.     62  pages.     65  cents. 

YiXi'&E.'R.— Directions  for  Work  in  the  Histological  Laboratory.     By  G. 
Carl  Huber,  M.D.,   Assistant  Professor   of    Histology  and    Embry- 
ology, University  of  Michigan.     Third  edition,  revised  and  enlarged. 
Octavo.      204  pages.     Cloth,  $1.50. 
It  is  adapted  fcr  classes  in  medical  schools  and  elsewhere  where  it  is  desired  to 
furnish  the  class  with  material  already  prepared  for  the  demonstration  of  structure 
rather  than  to  give  instruction  in  the  technique  of  the  laboratory.     Provision  tor  ttie 
latter  Is  made,  however,  by  the  addition  of  a  section  of  about  50  pages  on  the  meth- 
ods for  laboratory  work.     This  section  includes  methods  of  macerating,  hardening 
and  fixing,  decalcifying,  impregnation,  injecting,  embedding,  c:aining,  and  methods 
for  preparing  and  staiivJng  blood  preparations.     The  last  is   accompanied  by  an  ex- 
cellent plate  of  blood  elements.    The   selection  of  methods  has  in   the  main  been 
judicious.    The  expositions  are  both  clear  and  concise. — loumal  of  Comparative 

^Tii'tWs  little  book  Dr.  Huber  has  given  us  a  model  manual  of  microscopical  tech- 
nique in  the  laboratory  study  of  histology.  The  subject  matter  is  divided  into  con- 
venient  chapters,  commencing  with  the  cell  and  cell  division  (karyokinesis)  in  plant 
and  animal  life,  and  gradually  developing,  by  easy  stages,  the  most  complex  tissues 
of  the  animal  and  vegetable  organism.  Between  each  lesson  blank  pages  are  inter- 
leaved, to  be  used  by  the  student  for  drawing  the  objects  spen  by  him  with  a  pencil 
or  crayon— a  most  excellent  plan  as  nothing  fixes  the  appearance  and  characteristics 
of  objects  more  firmly  on  the  mind  than  drawing  them,  either  free-hand  or  with  a 
camraa  lucida  (the  former  being  preferable,  as  it  educates  the  hand  and  eye).  With 
each  subject  is  given  the  source  and  origin,  the  best  methods  for  obtaining  and  pre- 
paring it.  and  attention  is  called  to  the  most  noteworthy  or  characteristic  points  tor 
examination. 


Publications  of  George    IVa/ir,  Ann  A?-/>or. 

The  second  part  of  the  book  is  devoted  to  methods  for  laboratory  work:  soften 
ing,  hardening,  decalcification,  etc.,  of  the  matter  in  gross;  embedding,  sectioning, 
staining  and  mounting,  etc.  The  best  stains,  with  methods  of  preparing  the  same, 
and,  in  short,  a  general  formulary  for  the  various  reagents,  etc.,  concludes  the  work, 
which  is  intended,  as  stated,  as  an  nidt  memoire  supplementary  to  a  course  of  lec- 
tures on  histology. 

We  congratulate  Dr.  Huber  on  the  skill  with  which  he  has  developed  the  idea, 
and  the  didactic  methods  which  he  has  employed.  Such  a  book  cannot  but  prove  a 
great  help  to  both  student  and  teacher,  and  it  should  be  more  widely  known  —St. 
Louis  Medical  and  Suraeon's  Journal. 

Dr.  Carl  Huber's  Laboratory  Work  in  Histology  is  an  excellent  manual,  and  if 
the  medical  students  of  Michigan  University  are  conscientiously  put  through  it  they 
must  be  extremely  well  taught.  Dr.  Huber  puts  the  methods  of  embedding,  staining, 
etc.,  in  a  clear  tabular  form,  and  gives  full  practical  instructions  in  all  those  minute 
details  which  can  only  be  given  by  a  man  who  has  a  masterly  knowledge  of  his  sub- 
ject. The  American  student,  according  to  the  evidence  of  this  textbook,  has  the 
work  of  cutting  and  staining  done  for  him,  and  has  only  to  mount  sections  aflBxed  to 
coversljps.  By  this  plan  he  must  gain  an  excellent  collection  of  slides. — British 
Mfdical  Journal. 

]0\{'^'S>0^.—F.l'!)nents  of  the  Law  of  Negotiable  Contracts.  By  E.  F. 
Johnson,  B.S.,  LL.M.,  formerly  Professor  of  Law  in  the  Department 
of  Law  of  the  University  of  Michigan.  Svo.,  735  pages.  Full  law 
sheep  binding.     $3-75. 

Several  yeais  of  experience  as  an  instructor  has  taught  the  author  that  the  best 
method  of  impressing  a  principle  upon  the  mind  of  the  student  i  s  to  show  him  a  prac- 
tical application  of  it.  To  remember  abstract  propositions,  without  knowing  their 
application,  is  indeed  difficult  for  the  average  student.  But  when  the  primary  prin- 
ciple is  once  associated  in  his  mind  with  particular  facts  illustrating  its  applica- 
tion, it  is  more  easily  retained  and  more  raiiidly  applied  to  analou-ous  cases. 

It  is  deemed  advisable  that  the  student  in  the  law  should  l)e  required,  during  his 
course,  to  master  in  connection  with  each  general  branch  of  the  law,  a  few  well-se- 
lected cases  %vhich  are  illustrative  of  the  philosopliy  of  that  subject.  To  require  each 
student  to  do  this  in  the  larger  law  schools  has  been  found  to  be  impracticable,  ow- 
ing to  a  lack  of  a  sufficient  number  of  copies  of  individual  cases.  The  only  solution 
of  this  difficulty  seems  to  be  to  place  in  the  hands  of  each  student  a  volume  contain- 
ing the  desired  cases.  In  the  table  of  cases  will  be  found  many  leading  cases  printed 
in  black  type.— From  Preface. 

KlRN.—A\-/igion  a  Rational  Demaud.  By  Kev.  G.  J.  Kirn,  M.A.,  Ph.D. 
230  pages.     i2mo.     $1.00. 

It  is  really  a  fascinating  theme,  particularly  to  thoughtful  and  intelligent  people. 
The  chapter  on  Materialism  is  alone  worth  the  cost  of  the  tiooV.— Evangelical  Mes- 
senger. 

The  style  is  remarkably  clear  and  terse. —  Christian  Harvester. 

Dr.  Kirn  has  done  the  cause  of  religion  a  great  service  by  writing  this  book. — 
Church  Advocate. 

The  argument  is  well  sustained  :  every  point  is  met  with  candor  and  fairness, 
and  the  conclusions  are  clearand  strong  if  not  unanswerable. — Methodist  Protestant. 

LEVI-FRANCOIS. — Questions  Based  on  Levi  and  Francois'  Reader 
37  passes.      Pamphlet.      25  cents. 

LEVI-FRANCOIS- — A  French  Reader  for  Begiimers,  ivilh  lYoles  and 
Vouihiilary.  By  Moritz  Levi,  Assistant  Professor  of  French,  Univer- 
sity of  Michigan,  and  Victor  E.  Francois,  Instructor  in  French,  Uni- 
versity of  Michigan.      12  mo.     261  pages.      $i.oo. 

This  reader  differs  from  its  numerous  predecessors  in  several  respects.  First, 
being  aware  that  students  and  teachers  in  the  French  as  well  as  in  the  German  de- 
partments of  high  schools  and  colleges  are  becoming  tired  of  translating  over  and 
over  again  the  same  old  fairy  tales,  the  editors  have  avoided  them  and  selected  some 
interesting  and  easy  short  stories.  They  have  also  suppressed  the  poetic  selections 
which  arc  never  translated  in  the  classroom.  Finally,  they  have  exercised  the  great- 
est care  in  the  gradation  of  the  passages  chosen  and  in  the  preparation  of  the  vocab- 
ulary, every  French  word  being  followed  not  only  by  its  primitive  or  ordinary  mean- 
ing, but  also  by  the  different  English  equivalents  which  the  text  requires.  After 
careful  examination,  we  consider  this  reader  as  one  of  the  best  on  the  American 
market. 


Publications  of  George   Wahr,  Ann  Arbor. 

LLOYD. — Philosophy  of  History.  An  Introduction  to  the  PJiilosophical 
Study  of  Politics.  By  Professor  Alfred  H.  Lloyd,  University  of 
Michigan.     i2mo.     250  pages.     Cloth,  $1.00. 

Philosophy  of  History. — "Professor  Lloyd  has  already  outlined  his  conception 
of  history  in  a  volume  entitled  Citizenship  and  Salvation  (i8g7).  The  present  ex- 
position is  at  the  same  time  more  definite  and  more  comprehensive.  About  a  third 
of  the  book  is  devoted  to  a  philosophic  study  of  the  data  of  history;  and  this  is 
followed  by  an  analysis  of  the  social  unit,  the  group,  and  by  a  systematic  account  of 
the  formula  of  history  as  it  appears  to  the  philosopher.  The  last  four  chapters  are 
essays  in  which  such  topics  as  "Good  and  Evil"  and  "The  Great  Man"  are  treated 
from  the  historical  point  of  view  which  is  expounded  in  the  main  part  of  the  vol- 
ume.  In  these  chapters  as  well  as  in  the  second  part  of  the  book  acute  and  valua- 
ble comments  011  different  phases  of  historical  development  abound.  The  first  part 
of  the  volume,  however,  discussing  Time.  Causation,  the  Individual  and  Nature  as 
data  of  history  [is  the  most]  valuable." — The  Philosophical  Review,  March,  iqoo. 

"The  Philosophy  of  History  is  a  meritorious  attempt  to  connect  the  facts  of 
history  with  the  causes  wtiich  have  influenced  the  social  evolution  of  the  human 
race.     Most  writers  are  satisfied  with  the  visible,  immediate  and  direct  causes  of 

the  rise  or  fall  of  nations but  Professor  Lloyd  wants  us   to  go  deeper 

yet, [but]  whatever  be  the  mental  attitude  of  the  readers  with  regard 

to  the  positions  advocated  in  the  book  all  will  admit  that  it  is  written  with  great 
keenness  of  perception  and  with  a  sincere  desire  to  reconcile,  so  far  as  possible,  all 
intellectual  and  moral  differences.  If  the  author  has  not  succeeded  in  accomplish- 
ing the  task  [of  reconciliation],  it  is  because  there  are  differences  that  can  not  be 
reconciled,  even  by  benevolence  and  ingenuity  combined." — Annals  of  the  Ameri- 
can Academy  of  Political  and  Social  Science,  March,  1900. 

LYM AN-H ALL-GOD DARD.—///^-!'<5;77.  By  Elmer  A.  Lyman,  A.B., 
Edwin  C.  Goddard,  Ph.B.,  and  Arthur  G.  Hall,  B.S.,  Instructor 
in  Mathematics,  University  of  Michigan.  Octavo.  75  pages.  Cloth, 
90  cents. 

MATTHEWS. — Syllahus  0/  Lectures  on  Pharmacologv  atid  Therapeu- 
tics in  the  University  of  Michigan.  .4rranged  Especially  for  the 
Use  of  the  Classes  Taking  the  IVork  in  Pharniacolog}'  ana  7  kera  ■ 
peutics  at  the  University  of  Afichigan.  By  ?.  A.  Matthews,  M.D., 
Assistant  in  Pharmacy  and  Therapeutics,  University  of  Michigan. 
i2mo.      114  pages.     $1.00. 

McCANDLESS.— 7;z/;?//rtr  A^udysis  of  the  Law  of  Real  Property, 
follo'uitig  Blackstone.  Arranged  by  L.  W.  McCandless.  19  charts. 
Quarto.     Cloth,  $1.50. 

This  analysis  follows  Book  II  of  Blackstone,  and  will  prove  a  very  valuable  aid 
to  students.  The  critic  remembers  that  in  the  dim  and  hoary  past  when  he  was 
a  student  himself,  he  prepared  an  analysis  of  Bispam's  Equity.  He  certainly  en- 
deavored to  do  complete  justice  to  that  learned  work  and  the  result  was  a  sheet 
some  1x4  (yards)  in  dimensions.  Acting  according  to  the  advice  of  some  intimate 
friends  he  hung  it  up,  on  a  shade  roller,  but  somehow,  never  could  persuade  any- 
body to  read  it  completely  through.  In  fact,  the  aforesaid  critic  was  afraid  to 
attempt  it  Itself  when  the  "  magnum  opus  "  was  once  finished  and  the  fearful  and 
wonderful  document  still  remains  filed  away  somewhere  among  his  dusty  papers. 
This  little  incident  of  a  past  career  is  mentioned  not  that  we  would  discourage  the 
reader  of  Mr.  McCandless's  vi-ork  or  in  any  way  compare  his  learned  production  with 
the  superficial  synopsis  which  we  had  ourselves  compiled.  It  has  long  been  a  source 
of  wonder  to  us  why  real  estate  law  has  not  hitherto  been  "chartered,"  for  there  seems 
to  be  no  branch  of  jurisprudence  so  well  adapted  to  such  a  form  of  presentation. 
The  author's  work  gives  a  bird's  eye  view  of  real  property  principles  and  as  pre- 
viously stated  wilt  prove  of  great  value  to  the  student,  particularly  around  examina- 
tion time  for  he  can  tell  at  a  glance  what  would  otherwise  force  him  to  spend  much 
valuable  time  in  searching  through  Blackstone.  Take  it  all  in  all,  the  author  is  to 
be  heartily  commended  and  we  would  like  to  see  his  work  used  as  a  text  book  in 
not  only  the  University  of  Michigan  but  in  all  the  leading  law  schools  of  the  country. 
For  the  benefit  of  them  who  have  not  had  the  pleasure  of  perusing  it  we  can  state 
that  it  is  a  series  of  some  nineteen  large  charts  each  about  2  feet  by  1%.  handsomely 
bound  so  that  the  entire  subject  may  be  embraced  in  series  of  sweeping  glances. — 
Law  Journat,  N'.  V. 


Publications  of  G forge   IVa/ir,  Ann  Arbor. 

MEADER.  —  Chronological  Outline  of  Roman  Literature.  By  C  L 
Meadcr,  A.B.,  Instructor  in  Latin  in  University  of  Michigan 
Chart,  25  cents. 

MICHIGAN  BOOK.  — r//c  U.  of  M.  Book.  A  Record  of  Student  Lije 
and  Student  Organizations  in  the  University  of  Michigati.  Articles 
contributed  by  members  of  the  Faculty  and  by  prominent  Alumni. 
Si. 50. 

MONTGOMERY-SMITH.— /-rt/'^';v7A);7  Manual  of  Elementary  Chem- 
istry. By  Jabez  Montgomery,  Ph.D.,  Professor  of  Natural  Science, 
Ann  Arbor  High  School,  and  Roy  B.  Smith,  Assistant  Profes- 
sor in  Chemical  Laboratory,  Ann  Arbor  High  School.  12  mo.  150 
pages.     Cloth,  $1.00. 

This  Work  is  intended  as  a  laboratory  guide  to  bo  used  in  connection  with  a  good 
text-book  or  course  of  lectures,  and  in  its  arrangement  and  scope  it  is  based  upon 
the  practical  experience  of  two  instructors  in  the  Ann  Arbor  Higli  School.  It  is 
therefore  restricted  to  such  work  as  may  be  done  by  the  average  high  school  pupil. 
The  experiments  wliich  are  directed  are  given  more  to  enable  the  student  to  compre- 
hend the  methods  of  analytical  chemistry  than  to  acquire  particular  proficiency  in 
the  work  of  chemical  analysis.  The  work  is  characterized  by  minuteness  of  explan- 
ation, a  feature  which  will  be  appreciated  by  the  beginner. — Pharmaceutical  tira 

NETTO. —  The  Theory  of  Substitutions  and  its  Application  to  Algebra. 
By  Dr.  Eugene  Netto,  Professor  of  Mathematics  in  the  University  of 
Giessen.  Revised  by  the  author  and  tran.slated  with  his  permission, 
by  F.  N.  Cole,  Ph.D.,  formerly  .Assistant  Professor  of  Mathematics 
in  the  University  of  .Michigan,  Professor  of  Mathematics,  Columbia 
University.     8  vo.     301   pages.     Cloth.     $3.00. 

NOVY. — Laboratory  Work  in  Physiological  Chemistry.  By  P'rederick  G. 
Novy,  Sc.D.,  M.D.,  Junior  IVofessor  of  Hygiene  and  Physiological 
Chemistry,  University  of  Michigan.  Second  edition,  revised  and 
enlarged.  With  frontispiece  and  24  illustrations.  Octavo.  Cloth, 
$2.00. 

This  book  is  designed  for  directing  laboratory  work  of  medical  students,  and  in 
showing  them  how  to  study  the  physics  and  physiology  of  the  digestive  functions  of 
the  blood,  the  urine  and  other  substances  which  the  body  contains  normally,  or 
which  it  speedily  eliminates  as  effete  material.  The  second  edition  has  appeared 
within  a  very  short  time  after  the  publication  of  the  first.  The  first  chapters  deal 
with  the  facts,  the  carbohydrates  and  proieids.  Then  follow  others  upon  the  saliva, 
the  gastric  juice,  the  pancreatic  secretion,  the  bile,  blood,  milk,  and  urine,  while  the 
closing  chapter  deals  with  a  list  of  reagents. 

While  the  book  is  manifestly  designed  for  the  use  of  Dr.  Novy's  own  students,  we 
doubt  not  that  other  teachers  will  find  it  a  valuable  aid  in  their  work.  At  the  close 
of  the  volume  are  a  number  of  illustrations  of  the  various  sedimentary  substances 
found  in  the  urine,  taken  from  the  work  of  von  Jaksch. — The  Therapeutic  Gazette 

This  book,  although  now  in  its  second  edition,  is  practically  unknown  to  British 
readers.  Up  to  the  present,  anyone  wishing  to  find  out  how  a  particular  analytical 
method  in  physiological  chemistry  ought  to  be  carried  out,  had  of  necessity  to  refer 
to  a  German  text-book.  This  comparatively  small  book — for  it  only  covers  some 
three  hundred  pages — gives  as  good  a  general  account  of  ordinary  laboratory  methods 
as  any  teacher  or  student  could  desire.  Although  the  author  refers  in  his  preface  to 
help  derived  from  the  works  of  Salkowski,  Hammarsten  and  others,  it  is  but  fair  to 
say  that  the  book  has  undoubtedly  been  written  by  one  who  has  worked  out  the 
methods  and  knows  the  importance  of  exact  practical  details— Edinburgh  Med. 
Jour.,  Scotland. 

Physiological  chemistry  is  one  of  the  most  important  studies  of  the  medical  curri- 
culum. The  cultivation  of  this  field  has  until  recently  been  possible  to  but  few. 
The  rapid  development  of  this  department  of  science  within  a  few  years  past  has 
thrown  much  and  needed  light  upon  physiological  processes.  It  is  from  this  quarter 
and  from  bacteriological  investigations  that  progress  must  chiefly  be  expected.  The 
rapid  growth  of  this  branch  of  chemistry  is  attended  by  another  result.  It  necessi- 
tates the  frequent  revision  of  text-books.  The  present  edition  of  Dr.  Novy's  valu- 
able book  is  almost  wholly  re-written.    It  is  representative  of  the  present  state  of 


Publications  of  George   IVa/ir,  Anti  Arbor. 

knowledge  and  is  replete  with  information  of  value  alike  to  student  and  practitioner.. 
Few  are  better  prepared  to  write  such  a  book  than  Dr.  Novy,  who  has  himself  done 
much  original  work  in  this  field.— The  Medical  liuUelm.  Philadelphia. 

This  is  a  greatly  enlarged  edition  of  Dr.  Novy's  work  on  Physiological  Chemistry, 
and  contains  a  large  amount  of  new  material  not  found  in  the  former  edition.  It  is 
designed  as  a  text-book  and  guide  for  students  in  experimental  work  in  the  labora- 
tory, and  does  not  therefore  cover  the  same  ground  as  the  works  of  Gamgee,  Lea, 
and  other  authors  of  books  on  physiological  chemistry.  As  a  laboratory  guide  it 
should  be  adopted  by  our  medical  colleges  throughout  the  country,  because  it  is  an 
American  production,  contains  only  such  directions  and  descriptions  as  have  been 
verified  by  actual  practice  with  students,  and  because  it  is  clear,  concise  and  definite 
in  all  its  statements.  Its  nrst  ten  chapters  treat  of  fats,  carbohydrates,  proteins, 
saliva,  gastric  juice  pancreatic  secretion,  bile,  blood,  milk,  and  urine.  Chapter  xi. 
is  devoted  to  the  quantitative  analysis  of  urine,  milk,  gastric  juice,  and  blood,  while 
chapter  xii.  gives  tables  for  examination  of  urine  and  a  list  of  reagents.— 4m. 
Medico-Surgical  Bulletin,  N.  Y. 

NOVY. — Labo7-atory  Work  in  Bacteriology.  By  Frederick  G.  Novy,  Sc. 
D.,  M.D.,  Junior  Professor  of  Hygiene  and  Physiological  Chemistry, 
University  of  Michigan.  Second  edition,  entirely  re-written  and 
enlarged,  563  pages.      Octavo.      $3.00. 

As  a  teacher  of  bacteriology,  the  author  has  had  extensive  experience,  and  the 
second  edition  of  his  book  will  be  highly  prized  by  students  for  its  practical  service 
and  thoroughness.  The  methods  of  investigation  described  are  mainly  those  which 
have  been  employed  in  the  hygienic  laboratory  or  the  University  of  Michigan,  and 
they  have  stood  the  test  of  practical  demonstration  and  usefulness.  One  of  the 
most  interesting  parts  of  the  book  is  the  chapter  on  the  chemistry  of  bacteria,  and 
the  general  reader  cannot  fail  to  obtain  from  it  a  clear  understanding  of  the  com- 
plex changes  induced  by  these  minute  organisms.  The  functions  of  the  various 
ferments  are  also  very  cleverly  discussed,  .^n  enumeration  of  the  chapter  headings 
will  serve  to  show  the  scope  of  the  work  :  Form  and  Classification  of  Bacteria ;  Size 
and  Structure  of  Bacterial  Cell ;  Life  History  of  Bacteria ;  Environment  of  Bacteria ; 
Chemistry  of  Bacteria;  the  Microscope;  Cultivation  of  Bacteria;  Non-Pathogenic 
Bacteria;  Bouillon,  Agar.  Milk  and  Modified  Media,  the  Incubator  and  Accessories; 
Relation  of  Bacteria  to  Disease — Methods  of  Infection  and  Examination;  Patho- 
genic Bacteria;  Yeasts,  Moulds  and  Streptotrices;  Examination  of  Water,  Soil  and 
Air;  Special  Methods  of  Work.  To  the  latter  subject,  two  chapters  are  devoted, 
in  which  are  very  fully  outlined  various  special  methods  of  value  to  advanced 
students.— P/iaj-maceufim?  Era.  N.  Y. 

This  book  is  intended  for  the  student  and  seems  admirably  to  subserve  the  pur- 
pose for  which  it  has  been  written.  The  arrangement  of  the  subject-matter  con- 
forms closelv  to  that  followed  in  the  Hygienic  Laboratory  of  the  University  of 
Michigan.  Those  methods  only  are  described  that  have  withstood  the  test  of  prac- 
tical experience.  Many  of  the  methods  and  soire  of  the  apparatus  are  original. 
Illustrations  of  bacteria  and  descriptions  of  cultural  peculiarities  have  been 
omitted,  inasmuch  as  the  student  is  expected  to  Isarn  these  from  personal  observa- 
tion. The  work  is  divided  into  15  chapters  under  the  following  headings  :  Form  and 
classification  of  bacteria;  size  and  structure  of  the  bacterial  cell ;  the  life-histoiy  of 
bacteria;  the  environment  of  bacteria;  the  chemistry  of  bacteria;  the  microscope; 
the  hanging  drop:  simple  staining;  gelatin  and  potato  media;  cultivation  of  bac- 
teria; the  nonpathogenic  bacteria;  bouillon,  agar,  milk,  and  modified  media;  the 
incubator  and  accessories;  relation  of  bacteria  to  disease,  methods  of  infection  and 
examination;  the  pathogenic  bacteria;  yeasts,  moulds,  and  streptothrices  :  examina- 
tion of  water,  soil  and  air;  special  metQods  of  \\<JxV.—PIiiladelphia  Medical 
Journal. 

REED-GUTHE. — A  Manual  of  Physical  iMeasurei/ietits.  By  John  O. 
Reed,  Junior  Professor  of  Physics,  University  of  Michigan,  and 
Karl  E.  Guthe,  Assistant  Professor  of  Physics,  University  of  Michi- 
gan.     1S5  pages,  Sg  illustrations:     Octavo.     S1.50. 

REED. — College  Physics.  For  Students  in  Academies  and  Colleges. 
PJiysics  I.  Mechanics — Sound — Light.  By  John  O.  Reed,  Junior 
Professor  of  Physics  University  of  Michigan.  Octavo.  Cloth.  300 
pages.     $1.50. 

ROOD. — Important  English  Statutes.  Edited  by  John  R.  Rood,  Uni- 
versity of  ^lichigan.      8vo.      24  pages.     Imitation  leather,  25  cents. 


Puhlications  of  Geori:;e    Wahr,  Ann  Arbor. 

This  pamphlet  contains  the  Statute  of  Frauds  (29  Car.  II.  c.  3)  complete,  also 
•Loiii  Campbell's  Act,  the  Mandamus  Act  of  9  Anne,  and  the  N'ictorian  Wills  Act. 
The  intention  is  to  furnish  students  a  copy  of  all  those  important  English  statutes 
which  have  been  generally  re-enacted  in  the  Americau  statutes  and  are  therefore 
prominent  in  his  courses  of  study. 

ROOD. —  On  Attachments,  Garnishments,  Judgments,  and  Executions.  By 
Jolin  R.  Rood,  University  of  Michigan.  'I'he  table  of  contents, 
table  of  cases,  and  text  cover  183  pages.  The  leading  and  illustra- 
tive cases  and  notes  cover  514  pages.  A  very  full  index  has  been 
compressed  into  36  pages.  'I'otal  733  pages.  The  two  books 
bound  as  one,  in  buckram,  for  one  price.     $3.00.     Octavo. 

The  text  is  not  claimed  to  be  exhaustive  upon  any  point.  To  make  it  so  would 
defeat  the  very  purpose  for  which  it  was  written  «  tree  is  not  complete  without  all 
its  foliage,  but  the  outline  of  the  branches  cannot  be  clearly  seen  till  the  leaves  have 
fallen.  In  the  present  discussion,  details  have  been  similarly  omitted  so  that  the 
more  important  matters  can  be  seen.  Anson  on  Contracts  may  be  said  to  cover  all  the 
matters  treated  in  the  elaborate  works  on  particular  contracts,  such  as  sales,  agency, 
partnership,  suretyship,  deeds,  mortgages,  etc  In  like  manner  this  manual  is 
intended  to  explain  all  the  matters  covered  by  the  extensive  treatises  on  jurisdiction, 
judgments,  res  judicata,  attachment,  garnishment,  and  executions.  It  is  not  de- 
signed to  trespass  on  the  field  occupied  by  any  of  these  books,  but  to  give  what 
none  of  them  do  or  can — a  clear  outline  of  the  whole,  without  that  cloud  of  details 
and  the  confusing  review  of  inconsistent  decisions  upon  them,  which  the  writer  of  a 
complete  text  must  give.  In  this  way,  it  is  hoped  that  a  comprehensive  view  of 
broad  fundamental  principles  may  be  obtained,  with  a  clear  vision  of  the  relations 
between  each  part  and  all  the  others,  and  of  the  successive  steps  in  each  pro- 
ceedint;  from  beginning  to  end. 

SOLIS. —  The  Diagnosis  of  Diseases  of  the  Cord,  Location  of  Lesions. 
By  Dr.  Grasset.  Translated  by  Jeanne  C.  Solis,  M.l3.,  Demon- 
strator of  Nervous  Diseases  and  Electrothereapeutics  in  the  Uni- 
versity of  Michigan.     gS  pages.     Cloth,  65  cents. 

STRUMPELL. — Short  Guide  for  the  Clinical  Examinatioti  of  Patients. 
Compiled  for  the  Practical  Students  of  the  Clinic,  by  Professor  Dr. 
.\(lolf  Striimpell,  Director  of  the  Medical  Clinic  in  Erlangen.  Trans- 
lated by  permission  from  the  third  Cerman  edition,  by  Jos.  L.  Abt. 
Cloth,  39  pages,  35  cents. 

Preface  to  the  Second  P2dition. — The  second  edition  of  this  book  has  been 
improved  by  me  in  several  parts,  and  particularly  the  sections  treating  of  the  exam- 
ination of  the  stomach  and  nervous  system  liave  been  slightly  extended.  The  author 
trusts  that  the  book  may  also  fulfill  its  purpose  in  the  fuiure  in  assisting  the  student 
to  learn  a  systematic  examination  of  the  patient,  and  to  impress  on  him  the  most 
important  requisite  means  and  methods. 

SUNDERLAND.  — ();/^  Upivard  L.ook  Each  Day.  Poems  of  Hope  ana 
Faith.  Selected  by  J.  T.  Sunderland,  fhird  Edition,  16  mo 
White  Binding,  30  cents;    Cloth,  40  cents;   Full   morocco,  75   cents. 

SUNDERLAND— (?rrt/«.f  of  Gold.  Some  Thoughts  and  a  Brief  Prayer 
/•'or  l-'.aih  Day  of  the  Months.  Designed  as  Daily  Helps  in  the 
Higher  Life.  Compiled  by  J.  T.  Sunderland.  White  Binding,  35 
cents. 

WARTHIN. — Practical  Pathology  for  Students  and  Physicians.  A 
Mc.nual  of  Laboratory  and  Post-Mortem  Technic,  Designed  Espe- 
cially for  the  Use  of  Junior  and  Senior  Students  in  Pathology  at 
the  University  of  Michigan.  By  Aldred  Scott  Warthin,  Ph.D.,  M. 
D.,  Instructor  in  Pathology,  University  of  Michigan.  Octavo.  234 
pages.     Cloth,  $1.50. 

We  have  carefully  examined  this  book,  and  our  advice  to  every  student  and  prac- 
•litioner  of  medicine  is— buy  it.     You  will  never  regret  having  invested  your  money  in 


Piiblicatiojis  of  Geori^e   Wa/ir,  Ann  Ardor. 

and  you  will  acquire  such  a  large  fund  of  information  that  the  study  of  pathology 
will  become  a  pleasure  instead  of  the  drudgery  which  it  so  unfortunately  seems  to 
be  in  many  cases. 

Part  1.  of  this  book,  embracing  some  103  pages,  deals  with  the  materials,  which 
includes  the  proper  examination  and  notation  of  the  gross  changes  which  have 
occurred  in  every  part  of  the  body.  In  fact  it  is  a  complete  expos6  of  what  a  com 
plete  and  accurate  autopsy  should  be,  the  observance  of  which  is  oftener  followed 
in  the  breach  than  in  the  actuality.  Part  II.,  which  includes  134  pages,  deals  with 
the  treatment  of  the  material.  This  is  a  very  important  part  of  the  work,  as  it  gives 
explicit  directions  in  regard  to  the  instruments  to  use,  stains  and  staining  methods, 
drawing,  the  preservation  of  specimens,  hardening  methods,  in  fact,  of  all  those 
technical  points  connected  with  practical  pathological  microscopy.  The  examina- 
tion of  fresh  specimens,  injections,  methods  fixing  specimens  as  well  as  special 
staining  methods  are  taken  up.  In  fact,  space  forbids  us  to  give  the  entire,  which 
are  most  valuable  in  every  detail.— i>t.  Lrmi»  Medical  and  Surgical  Journal. 

WARTHIN.— .-^  B/(7/ti'  Book  for  Autopsy  Protocols.     Second    Edition. 

By     Aldred    Scott    Warthin,    M.D.,   Ph.D.,    Assistant     Professor    of 

Pathology  in  the  University  of  Michigan.     Bound  in  Full  Canvass, 

50  cents. 

The  medical  student  at  the  University  of  Michigan   is  expected  to  attend   twenty 

autopsies   during  the   last   two   years  of  his  studies,  and  this  book   is   designed    to 

facilitate  the  keeping  of  a  careful  protocol,  which  he  is  required   to  make  in   every 

case.    The  book  is  of  a  convenient  size  and  can  accommodate  the  autopsy  protocols 

of  ten  cases.     Each  autopsy  is  allowed   ten  pages,  carefully  ruled   for   the   various 

organs. 

WATSON. —  Tables  for  the  Calcitlation  of  Simple  or  Compojind  Intet  est 

and    Discount   and  the   Averaging  of  Accounts.      The    Values    of 

Annuities^   Leases,   Interest  in  Estates  and  the  Acctiinulatiofis  and 

Values  of  Investjuents  at  Simple  or  Cotnpound  Interest  for  all  Rates 

and  Periods ;  also  Tables  for  the  Conversion  of  Securities  and  Value 

of  Stocks  and  Bonds.      With  full  Explanation  for  Use.     By  James 

C.  Watson,  Ph.D.,  LL.D.     Quarto.     Cloth,  $2.50. 

A  book   most  valuable  to  bankers,   brokers,  trustees,  guardians,  judges,  lawyers, 

accountants,  and  all  concerned  in  the  computation  of  interest,  the  division  and  set- 

lement  of  estates,   the  negotiation   of  securities,  or  the  borrowing   and   lending  of 

money,  is  the  above  work  of  the  late  Professor  James  C.  Watson,  formerly  Director 

of  the  Observatories  and   Professor  of  Astronomy  at  the  Universities  of   .Michigan 

and  Wisconsin,  and  Actuary  of  the  Michigan  Mutual  Life  Insurance  Company. 

It  contains,  in  addition  to  the  usual  tables  for  the  calculation  of  siniJ^le  or  com- 
pound interest  and  discount,  many  tables  of  remarkable  value,  not  found  elsewhere, 
for  the  averaging  of  accoutn-,  the  values  of  annuities,  leases,  interests  in  estates, 
and  the  accumulations  and  values  of  investments;  also  tables  for  the  conversion  of 
securities,  and  the  values  of  stocks  and  bonds. 

There  are  also  given  very  full  and  clear  explanations  of  the  principles  involved  in 
financial  transactions,  and  a  great  variety  of  miscellaneous  examples  are  worked 
out  in  detail  to  illustrate  the  problems  arising  in  interest,  discount,  partial  payments, 
averaging  of  accounts,  present  values,  annuities  of  different  kinds,  annual  paymenis 
for  a  future  expectation  (as  in  life  insurance;,  or  for  a  sinking  fund,  conversion  of 
securities,  values  of  stocks  and  bonds,  and  life  interests. 

This  book  was  issued  from  tiie  press  under  the  author's  careful  supervision. 
Professor  Watson  was  noted  for  his  clear  insight  into  problems  involving  compula- 
tions, and  also  for  his  wonderful  ability  in  presenting  the  method  of  solution  of  such 
problems  in  a  plain  and  simple  manner.  The  varied  array  of  practical  examples 
given  in  connect  on  with  his  "Table  "  shows  these  facts  in  a  remarkable  manner. 
This  book  provides,  for  those  least  expert  in  calculations,  the  means  of  avoiding 
mistakes  likely  to  occur ;  and  for  the  man  engrossed  in  the  cares  of  business,  the 
means  of  making  for  himself,  with  entire  accuracy,  the  calculation  which  he  may 
need,  at  the  moment  when  it  is  needed. 

WRENTMORE-GOULDING.— .>^  Text-Book  of  Elementary  Mechan- 
ical Draii'inn  for  Use  in  Office  or  School.  Bv  Clarence  G.  Wrent- 
more,  B.S.,  C.E.,  and  Herbert  J.  Goulding,  B.S.,  M.E.,  Instructors 
in  Descriptive  Geometry  and  Drawing  at  the  University  of  Michigan. 
Quarto.      109  pages  and  165  cuts.     5i.oo. 

This  book  is  intended  for  a  beginners  course  in  Elementary  Mechanical  Drawing 
for  the  office  and  school.     Illustrations  have  not  been  spared,  and  the  explanations- 


Publications  of  George    Waiir,  Attn  Arbor. 

"have  been  made  in  a  clear  and  concise  manner  for  the  purpose  of  bringing  the  stu- 
dent to  the  desired  results  by  the  shortest  route  consistent  with  the  imparting  of  an 
accurate  knowledge  of  the  subject. 

The  first  chapter  is  devoted  to  Materials  and  Instruments;  the  second  chapter, 
Mechanical  Construction;  ihird  chapter,  Penciling.  Inking,  Tinting;  fourth  chap- 
ter, Linear  Perspective;  fifth  chapter.  Teeth  of  Gears. 

WRENTMORE.— /y«/«  Alphabets  for  Offiice  and  SJiool.  Selected  by 
C  (I.  \\  rentmore,  B.S.,  C.E.,  Instructor  in  Descriptive  Geometry 
and  Drawing,  University  of  Michigan.  Oblong.  19  plates.  Half 
leatlier,  75  cents. 

REV,  J.  T.  YOUNG —".5A^'-w<'«zjw.-  Its  Origin^  Doctrines,  and 
Dani^^i'rsy      Pamphlet.      72  pages.      25  cents. 

This  brochure  of  seventy  pages  in  paper  covers  is  a  sharp  attack  on  the  Mormon 
system,  showing  that  its  beginnings  were  in  fraud  and  villainy,  that  its  doctrines 
are  debasing,  and  that  its  continuance  in  the  United  States  is  a  political  and  reli- 
gious menace.  If  Mornionisin  is  one-tenih  as  bad  as  this  booklet  represents,  the 
marvel  is  that  the  viper  life  was  not  crushed  out  long  ago.  —  The  Standard,  Chicago. 

Souvenir  of  the  University  of  Michigan,  Ann  Arbor.  Containing  38 
jjhoto-gravuriis  of  President  Janius  15.  Angell,  prominent  University 
Buildings,  Fraternity  Houses,  Churches,  Views  of  Ann  Arbor,  Etc., 
Etc.      Done  up  in  l)lue  silk  cloth  binding.      Price,  50  cents,  postpaid. 

Physical  Laboratory  Note  Book. — A  Note  Book  for  the  Physical  Lab- 
oratory. Designed  to  be  used  in  connection  with  any  Physical 
Lal)oratory  Manual.  Contains  full  directions  for  keeping  a  Physical 
Laboratory  Note  Book.  112  pages  of  excellent  ledger  writing  paper, 
ruled  in  cross  sections,  Metric  System,  size  7x9^^  inches.  Bound  in 
full  canvass,  leather  corners.  Price,  by  mail,  30  cents.  Special 
])rices  to  Schools  furnished  on  application. 

Botanical  Laboratory  Note  Book. — .-/  Note  Book  for  the  Botanical  Lab- 
oratory.  200  pages  of  best  writing  paper,  ruled  with  top  margins. 
Pocket  on  inside  of  front  cover  for  drawing  cards.  Bound  in  sub- 
stantial cloth  cover  and  leather  back.  Size  6xg^.  Price,  by  mail, 
35  cents.     Special  prices  to  schools  furnished  on  application. 

Engineering  Laboratory  Note  Book. — A  Note  Book  for  the  Engineering 
I.ahoratory.  i'liiz'trsity  of  Micliigan.  Full  sheep  binding.  Size 
^Yz  X  8.  Contains  200  pages.  (With  general  directions.  Cross  sec- 
tion ruled).     Price  75  cents. 

Field  Engineering  Note  Book,  Surveying. — 200  pages.  Cross  section 
ruled.     l-'uU  Sheep  binding,  50  cents. 


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